NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION,
IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION
FOR IMMEDIATE RELEASE
26 April 2017
Recommended Combination
of
Mariana Resources Limited ("Mariana")
and
Sandstorm Gold Ltd ("Sandstorm")
Summary
· The board of
directors of Sandstorm and the Mariana Independent Directors are
pleased to announce that they have reached an agreement on the
terms of a recommended share and cash acquisition by which the
entire issued and to be issued ordinary share capital of Mariana
that Sandstorm does not already own will be acquired by Sandstorm
(the "Combination"). It is intended that the Combination
will be implemented by way of a court-sanctioned scheme of
arrangement under Part VIII of the Companies (Guernsey) Law.
· Sandstorm
currently holds 8,980,243 Mariana Shares, representing
approximately 7.0 per cent. of the issued ordinary share capital of
Mariana, and Mariana Warrants over a further 4,490,122 Mariana
Shares.
· If
successful, the Combination will result in Mariana Shareholders,
together, owning approximately 19.0 per cent. of the ordinary share
capital of the enlarged Sandstorm group (the "Combined
Group"), calculated by reference to the fully diluted issued
share capital of Mariana net of Sandstorm's interests in Mariana
Shares and Mariana Warrants.
Terms of the Combination
· Under the
terms of the Combination, Scheme Shareholders will receive 0.2573
New Sandstorm Shares and 28.75 pence in cash for each Scheme Share
held at the Scheme Record Time.
· Based on the
closing price of US$4.04 per Sandstorm Share on NYSE MKT and a
currency exchange rate of £0.7788 per US$, on 25 April 2017 (being
the last Business Day before the date of this Announcement), the
terms of the Combination represent:
· a
value of approximately 109.71 pence per Mariana Share;
· a
value of approximately £166.85 million for Mariana's fully diluted
ordinary share capital;
· a
premium of approximately 84.38 per cent. to the closing price of
59.5 pence per Mariana Share on AIM on 25 April 2017 (being the
last Business Day before the date of this Announcement); and
· a
premium of approximately 88.30 per cent. to the 20-day VWAP per
Mariana Share of 62.84 pence on AIM to 25 April 2017 (being the
last Business Day before the date of this Announcement), based on
the 20-day VWAP per Sandstorm Share of 348.16 pence on NYSE MKT to
the same date and utilising daily close composite exchange
rates.
· If, after
the date of this Announcement, any dividend and/or other
distribution is announced, declared or paid in respect of the
Mariana Shares, Sandstorm reserves the right to reduce the
Consideration by an amount up to the amount of such dividend and/or
distribution so announced, declared or paid.
Highlights of the Combination
· The
Combination is expected to create a leading mid-tier stream and
royalty company, delivering significant benefits to shareholders of
Mariana and Sandstorm.
· Stream and
royalty finance involves making an upfront payment to a mining
partner that is in need of capital to build their mine, refinance
their obligations, complete an acquisition or for various other
reasons. In exchange for that upfront payment, Sandstorm receives
the right to purchase a percentage of the gold produced from the
mine (in the case of a stream) or a portion of the revenue
generated from the mine (in the case of a royalty).
· The Combined
Group will have:
· A
diversified portfolio of 155 streams and royalties including 20
producing, 23 development-stage, 26 advanced exploration-stage and
86 exploration-stage assets (the "Stream and Royalty
Portfolio"). Of the projects that make up the Stream and
Royalty Portfolio, 63% are located in North America, 19% in South
America, 12% in Asia, 3% in Africa and 3% in Australia.
· A
30% incorporated joint venture interest ("JV") in the
high-grade, gold-copper, development-stage Hot Maden project in
northeast Turkey ("Hot Maden") which is held by Mariana via
the Turkish company Artmin Madencili Sanayive Tikaret AS.
· At
an appropriate stage post completion of the Combination, Sandstorm
intends to move from the current position of equity participation
in the JV to converting the Combined Group's interest in the JV
into a gold stream, adding significant future cash flow growth
potential to the Stream and Royalty Portfolio. This will require
the Combined Group to identify a purchaser for the JV interest,
with consideration of such sale being a newly created gold stream,
resulting in an effective conversion of the JV interest into a gold
stream. At present the Combined Group has not begun soliciting
interest in a conversion transaction and intends to conduct such
solicitation in the future after Hot Maden has undergone several
de-risking and value creating milestones.
· Hot
Maden is expected to be a straightforward, low capital cost project
with estimated initial construction capital requirements of US$169
million (approximately US$51 million attributed to the 30% JV
interest). The high-grade nature of the orebody and its wide
mineralized zones provide the potential for a low cost mining
operation, with estimated all-in sustaining costs of less than
US$400 per ounce gold-equivalent, which if achieved would lead to
significant cash flow generation from the project.
· Hot
Maden will continue to be managed by Turkish company Lidya
Madencilik Sanayive Ticaret A.S. ("Lidya"), the 70% JV
partner at Hot Maden. Lidya is an experienced Turkish company and
is part of Çalik Holding, a Turkish conglomerate with several
business lines including energy, telecommunication, finance,
construction, textiles and mining. Lidya is currently partnered
with Alacer Gold Corp. on the producing Çöpler mine and the
development-stage Gediktepe and Kartaltepe projects in
Turkey.
· An
interest in the remaining exploration properties of Mariana with a
focus on gold, silver and associated metals in Côte d'Ivoire,
Turkey and Argentina (the "Exploration Properties").
Following completion of the Combination, Sandstorm intends to
spin-out the Exploration Properties into a separate company (the
"SpinCo"), with the Combined Group retaining royalty
interests over the Exploration Properties together with equity in
the SpinCo. Sandstorm intends that the SpinCo would seek external
investment, as required, to fund future exploration costs, with a
goal of allowing shareholders of the Combined Group to maintain
significant exposure to the Exploration Properties without exposure
to further investment requirements.
· Following
the Combination, the Combined Group will maintain a strong balance
sheet with significant available liquidity from its US$110 million
revolving credit facility and strong cash flow from operations to
fund Sandstorm's ongoing strategy of future stream and royalty
acquisitions. The Combined Group will also have a portfolio of
equity and debt investments in other mining companies which is
intended to be monetized to support the Combined Group's ongoing
acquisition strategy in due course.
· Cash
currently remaining in the Mariana Group of approximately US$5
million as at 25 April 2017, being the last Business Day before the
date of this Announcement, which is expected to be sufficient to
fund Mariana's ongoing pro rata share of development programmes and
cash calls for the Hot Maden JV until January 2018 as well as
furthering exploration as prioritised in Mariana's area of
focus.
· Superior
market liquidity for Mariana Shareholders. Over the last 15 months,
the daily dollar trading volume of Sandstorm has averaged
approximately US$10 million between the NYSE MKT and
TSX.
· Experienced
management team which has completed more than US$2 billion in
stream and royalty transactions. On completion of the Combination,
Nolan Watson will be President and Chief Executive Officer of the
Combined Group and Glen Parsons will continue to manage the
Exploration Properties furthering the advancement up the
development curve.
Commenting on today's Announcement, John
Horsburgh, Non-executive Chairman of Mariana said:
"The Independent Directors recommend that
Mariana Shareholders approve this Combination. The Combination with
a company such as Sandstorm not only de-risks Mariana's exposure as
a single development/production asset company but provides a
stronger diverse platform and ability to finance the development of
the 30% owned high grade gold-copper discovery at Hot Maden in
Turkey. The terms of the Combination represent a significant and
attractive premium to the market price of Mariana Shares. The
Consideration includes a Cash Consideration Amount and a New
Sandstorm Share Consideration Amount component that provides an
opportunity for Mariana Shareholders to participate in the upside
of Hot Maden, as it advances to production, as well as exposure to
the existing Mariana Exploration Properties and the Combined
Group's streaming and royalty portfolio. The Independent
Directors have also taken into account the high liquidity of
Sandstorm Shares in arriving at this recommendation."
Commenting on today's Announcement, Nolan
Watson, President and Chief Executive Officer of Sandstorm
said:
"We believe that, by combining Mariana and
Sandstorm and subsequently converting the Hot Maden JV interest
into a gold stream, we can unlock the inherent value of Hot Maden
and deliver the optimal outcome for shareholders without incurring
further equity dilution to finance the interest in Hot Maden. We
believe that Hot Maden is a unique asset with a robust cash flow
profile and will be an anchor gold stream asset that has the
potential to more than double Sandstorm's attributable gold
equivalent production once in full operation. We are confident in
Lidya as the operating partner at Hot Maden and we look forward to
watching the project advance towards production and the
mineralization expand through continued exploration.
The Combination is expected to transform the
Combined Group into a leading mid-tier streaming and royalty
company and our focus will be growth by acquisition with the
primary objective being to add streams and royalties on quality
projects with exploration upside, with the balance of Mariana's
exploration portfolio contributing to this. We believe that we are
well positioned to continue to execute on our growth plans with
significant available liquidity from our US$110 million revolving
credit facility and a portfolio of equity and debt investments in
other mining companies that we plan to monetize."
Further details of the Combination
· It is
intended that the Combination will be implemented by means of a
Court-sanctioned scheme of arrangement under Part VIII of the
Companies (Guernsey) Law, further details of which are contained in
the full text of this Announcement. However, Sandstorm reserves the
right to implement the Combination by way of a takeover offer
(which shall be an offer for the purposes of section 337 of the
Companies (Guernsey) Law), subject to the Panel's consent and the
terms of the Co-operation Agreement.
· The Mariana
Independent Directors, who have been so advised by RFC Ambrian
Limited ("RFC Ambrian") as to the financial terms of
the Combination, consider the terms of the Combination to be fair
and reasonable. In providing their advice, RFC Ambrian have taken
into account the commercial assessments of the Mariana Independent
Directors. RFC Ambrian is providing independent financial advice to
the Mariana Independent Directors for the purposes of Rule 3 of the
Code.
· The Mariana
Independent Directors have also been advised by Raymond James Ltd.
("Raymond James") as to the financial terms and certain
Canadian capital market aspects of the Combination.
· Accordingly,
the Mariana Independent Directors have unanimously approved the
Combination and intend to recommend that Mariana Shareholders vote
in favour of the Scheme at the Guernsey Court Meeting and the
resolutions to be proposed at the General Meeting as they have
irrevocably undertaken to Sandstorm to do in respect of their own
beneficial holdings of, in aggregate, 905,050 Mariana Shares
representing approximately 0.71 per cent. of the issued ordinary
share capital of Mariana on 25 April 2017 (being the last Business
Day prior to the date of this Announcement).
· In addition
to the irrevocable undertakings from the Mariana Independent
Directors, Sandstorm has also received irrevocable undertakings
from each of Australian Investors Pty Ltd and AngloGold Ashanti
Holdings Plc to vote in favour of the Scheme at the Guernsey Court
Meeting and the resolutions to be proposed at the General Meeting
in respect of, in aggregate, 8,718,089 Mariana Shares, representing
approximately 6.80 per cent. of the issued ordinary share capital
of Mariana on 25 April 2017 (being the last Business Day prior to
the date of this Announcement).
· Sandstorm
has therefore received irrevocable undertakings to vote in favour
of the Scheme at the Guernsey Court Meeting and the resolutions to
be proposed at the General Meeting in respect of, in aggregate,
9,623,139 Mariana Shares representing, in aggregate, approximately
7.51 per cent. of the issued ordinary share capital of Mariana on
25 April 2017 (being the last Business Day prior to the date of
this Announcement).
· Further
details of these irrevocable undertakings, including the
circumstances in which they cease to be binding, are set out in
Appendix 3 to this Announcement.
· Glen Parsons
and Eric Roth have also irrevocably undertaken to Sandstorm to vote
in favour of those resolutions to be proposed at the General
Meeting on which they are entitled to vote in respect of, in
aggregate, 986,621 Mariana Shares representing approximately 0.77
per cent. of the issued ordinary share capital of Mariana on 25
April 2017 (being the last Business Day prior to the date of this
Announcement). As a consequence of the Retention Arrangements, Glen
Parsons and Eric Roth will not vote on the resolution to approve
the Scheme at the Guernsey Court Meeting.
· Neither of
Ron Ho or Mustafa Aksoy has given an irrevocable undertaking to
Sandstorm on the basis that: (i) Ron Ho is an employee of
Sandstorm; and (ii) Mustafa Aksoy does not hold any Mariana
Shares.
· The Scheme
Document, containing further information about the Combination and
notices of the Guernsey Court Meeting and General Meeting, together
with the Forms of Proxy, will be sent to Mariana Shareholders and
(for information only) to principals in the Mariana Employee Equity
Plans and holders of Mariana Warrants as soon as practicable and,
in any event, within 28 days of the date of this Announcement
(unless the Panel agrees otherwise). An expected timetable of
principal events will be included in the Scheme Document. The
Scheme Document will also be available for review on SEDAR under
Mariana's profile at www.sedar.com.
This summary should be read in conjunction
with, and is subject to, the full text of the following
Announcement (including its Appendices). The Combination will be
subject to the Conditions and certain further terms set out in
Appendix 1 and to the full terms and conditions to be set out in
the Scheme Document. Appendix 2 contains the sources and bases of
certain information contained in this summary and the following
Announcement. Appendix 3 contains details of the irrevocable
undertakings received by Sandstorm. Appendix 4 contains details of
the Sandstorm Forecast. Appendix 5 contains the definitions of
certain terms used in this summary and the following
Announcement.
Joint Webcast and Conference Call
Details
A conference call will be held on 26 April 2017
starting at 8:00 am (Pacific Daylight Time) to further discuss the
Combination. To participate in the conference call, use the
following dial-in numbers and conference ID, or join the webcast
using the link below:
North America Toll Free: 888 390 0546 U.K. Local:
+44 (0)800 652 2435 Conference ID: 75483188 Webcast URL:
http://ow.ly/CDou30bafh0
Enquiries
|
SandstormNolan Watson, President & CEO Adam Spencer,
Senior Vice President, Corporate DevelopmentDenver Harris, Investor
Relations |
+1 604 689 0234+1 416 238 1152+1 604 628 1178 |
| KPMG
LLP (Financial Adviser to Sandstorm)Helen RoxburghMichael
Nicholson |
+44 (0)
207 311 1000 |
|
|
|
|
Mariana John Horsburgh, Independent Chairman and
Non-Executive DirectorGlen Parsons, CEOKaren Davies, Head of
Investor Relations |
+61 2
8437 4588 |
| RFC
Ambrian Limited (Financial Adviser to Mariana)Stephen
AllenBhavesh Patel |
+44 (0)
20 3440 6800 |
|
Raymond James Ltd. (Canadian Financial Adviser to
Mariana)John WilletCraig McDougal |
+1 416
777 7000 |
|
Blytheweigh (PR Adviser to Mariana)Tim BlytheCamilla
HorsfallMegan Ray |
+44 (0)
207 138 3224 |
IMPORTANT NOTICE
The technical and scientific information
relating to Mariana and its assets contained in this Announcement
has been reviewed and approved for release by Eric Roth, Mariana's
Qualified Person as defined by NI 43-101 - Standards for Disclosure
of Mineral Projects. Mr Roth is Mariana's Chief Operating Officer
and Executive Director and holds a Ph.D. in Economic Geology from
the University of Western Australia, is a Fellow of the Australian
Institute of Mining and Metallurgy (AusIMM), and is a Fellow of the
Society of Economic Geologists (SEG). Mr Roth has 25 years of
experience in international minerals exploration and mining project
evaluation.
The person responsible for arranging for the
release of this Announcement on behalf of Mariana is Glen Parsons,
CEO.
KPMG LLP, which is authorised and regulated in
the UK by the FCA, is acting exclusively as financial adviser to
Sandstorm in relation to the Combination, and is not acting for any
other person in relation to such Combination. KPMG LLP will not be
responsible to anyone other than Sandstorm for providing the
protections afforded to its clients nor for providing advice in
relation to the Combination or any other matters referred to in
this Announcement or otherwise.
RFC Ambrian Limited, which is authorised and
regulated by the FCA, is acting exclusively for Mariana and noone
else in connection with the Combination and will not be responsible
to anyone other than Mariana for providing the protections afforded
to clients of RFC Ambrian Limited nor for providing advice in
relation to the Combination or any other matters referred to in
this Announcement.
Raymond James Ltd. is acting exclusively as
Canadian financial adviser to Mariana and to the Mariana
Independent Directors, and noone else in connection with the
Combination and will not be responsible to anyone other than
Mariana for providing the protections afforded to clients of
Raymond James Ltd. nor for providing advice in relation to the
Combination or any other matters referred to in this
Announcement.
Further information
This Announcement is not intended to and does
not constitute, or form part of, an offer, invitation or the
solicitation of an offer to purchase, otherwise acquire, subscribe
for, sell or otherwise dispose of any securities, or the
solicitation of any vote or approval in any jurisdiction, pursuant
to the Combination or otherwise, nor shall there be any sale,
issuance or transfer of securities of Mariana in any jurisdiction
in contravention of applicable law. The Combination will be made
solely by means of the Scheme Document, which will contain the full
terms and conditions of the Combination including details of how to
vote in respect of the Scheme. Any vote in respect of the Scheme or
other response in relation to the Combination should be made only
on the basis of the information contained in the Scheme
Document.
Overseas jurisdictions
The availability of the Combination to Mariana
Shareholders who are not resident in and citizens of the UK or
Guernsey may be affected by the laws of the relevant jurisdictions
in which they are located or of which they are citizens. Persons
who are not resident in the UK or Guernsey should inform themselves
of, and observe, any applicable legal or regulatory requirements of
their jurisdictions. Relevant clearances have not been, and will
not be, obtained from the securities commission or similar
regulatory authority of any province or territory of Canada.
Further details in relation to overseas shareholders will be
contained in the Scheme Document and Mariana Shareholders are
advised to read carefully the Scheme Document and related Forms of
Proxy once these have been dispatched.
The release, publication or distribution of this
Announcement in or into jurisdictions other than the UK or Guernsey
may be restricted by law and therefore any persons who are subject
to the law of any jurisdiction other than the UK or Guernsey should
inform themselves about, and observe, any applicable requirements.
Any failure to comply with the applicable restrictions may
constitute a violation of the securities laws of any such
jurisdiction. To the fullest extent permitted by applicable law,
the companies and persons involved in the Combination disclaim any
responsibility or liability for the violation of such restrictions
by any person. This Announcement has been prepared for the purposes
of complying with English law, Guernsey law, certain applicable
Canadian securities laws, the AIM Rules, the rules of the London
Stock Exchange and the Code and the information disclosed may not
be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws of
jurisdictions outside of England or Guernsey.
Copies of this Announcement and the formal
documentation relating to the Scheme and the Combination will not
be, and must not be, mailed or otherwise forwarded, distributed or
sent in, into or from any Restricted Jurisdiction or any
jurisdiction where to do so would violate the laws of that
jurisdiction.
Notice to US Holders, US Optionholders and US
Warrantholders
The Combination and the securities to be
issued in connection with the Combination have not been approved or
disapproved by the SEC or the securities regulatory authority of
any state of the United States, nor has the SEC or any such state
securities regulatory authority passed upon the fairness or merits
of the Combination or upon the accuracy or adequacy of this
Announcement. Any representation to the contrary is a criminal
offence.
The New Sandstorm Shares to be received by
Mariana Shareholders in exchange for their Mariana Shares pursuant
to the Combination have not been, and will not be, registered under
the US Securities Act or the securities laws of any state, district
or other jurisdiction of the United States, and such securities are
intended to be issued in reliance upon the exemption from the
registration requirements of the US Securities Act set forth in
Section 3(a)(10) thereof on the basis of the approval of the
Guernsey Court, which will be informed of the intention to rely
upon such exemption, and similar exemptions under applicable state
securities laws. Section 3(a)(10) of the US Securities Act,
generally, exempts the issuance of securities issued in exchange
for one or more bona fide outstanding securities, from the
registration requirements of the US Securities Act where the terms
and conditions of such issuance and exchange have been approved by
a court of competent jurisdiction that is expressly authorized by
law to grant such approval, after a hearing upon the fairness of
the substantive and procedural terms and conditions of such
issuance and exchange at which all persons to whom the securities
will be issued have the right to appear and receive timely and
adequate notice thereof, among other conditions and
requirements.
Mariana Options and Mariana Warrants will remain
outstanding under their terms and any securities issuable upon
exercise thereof have not been and will not be registered under the
U.S. Securities Act or applicable state securities laws. As a
result, Mariana Options and Mariana Warrants may not be exercised
in the United States or by or on behalf of a US Optionholder or US
Warrantholder, as applicable, nor may any New Sandstorm Shares
issued upon such exercise be offered or resold in the United States
or to or for the account of such a US holder, except pursuant to
the terms of such security and pursuant to a registration statement
under the U.S. Securities Act or an exemption from applicable
registration requirements or in a transaction not subject to the
registration requirements of the U.S. Securities Act and applicable
state securities laws.
The New Sandstorm Shares to be received by
Mariana Shareholders upon completion of the Combination may be
resold without restriction under the US Securities Act, except in
respect of resales by persons who are "affiliates" (within the
meaning of Rule 144 under the US Securities Act) of Sandstorm at
the time of the Section 3(a)(10) exchange or who have been
affiliates of Sandstorm within 90 days before the Section 3(a)(10)
exchange or who are affiliates of Sandstorm at the time of such
resale or within the 90-day period prior to such resale. Persons
who may be deemed to be "affiliates" of an issuer include
individuals or entities that control, are controlled by, or are
under common control with, the issuer, whether through the
ownership of voting securities, by contract, or otherwise, and
generally include executive officers and directors of the issuer as
well as principal shareholders of the issuer (which includes, among
others, 10% shareholders).
The financial information on Sandstorm in this
Announcement has been extracted or derived (without material
adjustment) from Sandstorm's Annual Report and Accounts for the
year ended 31 December 2016 and the unaudited interim production
results for the three-month period ending 31 March 2017, which are
prepared in US Dollars. The financial information on Mariana in
this Announcement has been extracted or derived (without material
adjustment) from Mariana's Annual Report and Accounts for the year
ended 31 December 2016, which are prepared in British Pounds
Sterling. In addition, such financial statements and other
financial information included or incorporated by reference in this
Announcement have been prepared in accordance with IFRS, which
differs from US GAAP in certain material respects, and thus are not
directly comparable to financial statements prepared in accordance
with US GAAP.
Information in this Announcement or in the
documents incorporated by reference herein concerning the
properties and operations of Sandstorm and of Mariana has been
prepared in accordance with requirements and standards under
securities laws, which differ from the requirements of US
securities laws. The terms "mineral resource", "measured mineral
resource", "indicated mineral resource" and "inferred mineral
resource" used in the Announcement or in the documents incorporated
by reference herein are mining terms as defined in accordance with
NI 43-101 under guidelines set out in the Definition Standards for
Mineral Resources and Mineral Reserves adopted by the Canadian
Institute of Mining, Metallurgy and Petroleum Council on 11
December 2005. While the terms "mineral resource", "measured
mineral resource", "indicated mineral resource" and "inferred
mineral resource" are recognized and required by securities laws
other than the requirements of US securities laws, they are not
recognized by the SEC. Disclosure of contained ounces are or may be
permitted disclosure under regulations applicable to Mariana and
Sandstorm; however, the SEC normally only permits issuers to report
resources as in place tonnage and grade without reference to unit
of production measures. As such, certain information contained in
the Announcement or in the documents incorporated by reference
herein concerning descriptions of mineralization and mineral
resources under these standards may not be comparable to similar
information made public by US companies subject to reporting and
disclosure requirements of the SEC.
US Holders should be aware that the Combination
described in the Announcement may have tax consequences in the
United States and should consult their own tax advisors to
determine the particular United States tax consequences to them of
the Combination in light of their particular situation, as well as
any tax consequences that may arise under the laws of any other
relevant foreign, state, local, or other taxing jurisdiction.
The enforcement by investors of civil
liabilities under the United States federal and state securities
laws may be affected adversely by the fact that Sandstorm and
Mariana are incorporated or organized under the laws of a
jurisdiction other than the United States, that some or all of
their officers and directors are and will be residents of countries
other than the United States, that some or all of the experts named
in the Announcement may be residents of countries other than the
United States, and that all or a substantial portion of the assets
of Sandstorm, Mariana and such persons are and will be located
outside the United States. As a result, it may be difficult or
impossible for US Holders (including US Optionholders and US
Warrantholders) to effect service of process within the United
States upon Sandstorm or Mariana, as applicable, their respective
officers or directors or the experts named herein, or to realize,
against them, upon judgments of courts of the United States
predicated upon civil liabilities under the federal securities laws
of the United States or applicable securities laws of any state
within the United States. In addition, US Holders (including US
Optionholders and US Warrantholders) should not assume that the
courts of Guernsey: (a) would enforce judgments of United States
courts obtained in actions against such persons predicated upon
civil liabilities under the federal securities laws of the United
States or applicable securities laws of any state within the United
States; or (b) would enforce, in original actions, liabilities
against such persons predicated upon civil liabilities under the
federal securities laws of the United States or applicable
securities laws of any state within the United States.
Notice to Canadian Holders
The enforcement by investors of civil
liabilities under the Canadian securities laws may be affected
adversely by the fact that Mariana is incorporated or organized
under the laws of a jurisdiction other than Canada, that some or
all of Sandstorm's and Mariana's officers and directors are and
will be residents of countries other than Canada, that some or all
of the experts named in this Announcement may be residents of
countries other than Canada, and that all or a substantial portion
of the assets of Sandstorm, Mariana and such persons are and will
be located outside Canada. As a result, it may be difficult or
impossible for Canadian Holders to effect service of process within
Canada upon Mariana, Sandstorm's and Mariana's respective officers
or directors or the experts named herein, or to realize, against
them, upon judgments of courts of Canada predicated upon
liabilities under Canadian securities laws. In addition, Canadian
Holders should not assume that the courts of Guernsey: (a) would
enforce judgments of Canadian courts obtained in actions against
such persons predicated upon civil liabilities under Canadian
securities laws; or (b) would enforce, in original actions,
liabilities against such persons predicated upon civil liabilities
under the Canadian securities laws.
The New Sandstorm Shares to be issued pursuant
to the Combination will be issued in reliance upon exemptions from
the prospectus requirements of securities legislation in each
province of Canada. Subject to certain disclosure and regulatory
requirements and to customary restrictions applicable to
distributions of shares that constitute "control distributions",
New Sandstorm Shares may be resold in each province and territory
in Canada, subject in certain circumstances, to the usual
conditions that no unusual effort has been made to prepare the
market or to create demand, no extraordinary commission or
consideration is paid and, if the selling shareholder is an insider
or officer of Sandstorm, such shareholder has no reasonable grounds
to believe that Sandstorm is in default of securities
legislation.
Canadian Holders should be aware that the
Combination described in this Announcement may have tax
consequences in Canada and should consult their own tax advisors to
determine the particular Canadian tax consequences to them of the
Combination in light of their particular circumstances, as well as
any tax consequences that may arise under the laws of any other
relevant foreign, state, local, or other taxing jurisdiction.
Forward-looking statements
This Announcement (including information
incorporated by reference in this Announcement), oral statements
made regarding the Combination, and other information published by
Sandstorm and Mariana contain statements which are, or may be
deemed to be, "forwardlooking statements" or "forward-looking
information" under applicable securities laws (collectively
referred to as "forward-looking statements").
Forwardlooking statements are prospective in nature and are not
based on historical facts, but rather on current expectations and
projections of the management of Sandstorm and Mariana about future
events, and are therefore subject to risks and uncertainties which
could cause actual results to differ materially from the future
results expressed or implied by the forwardlooking statements.
The forwardlooking statements contained in this
Announcement include statements relating to the expected effects of
the Combination on Sandstorm and Mariana, the expected timing and
scope of the Combination, production forecasts, plans with respect
to the JV interest, plans with respect to the Exploration
Properties, estimates of mineral resources, statements with respect
to the Hot Maden PEA and other statements other than historical
facts. Often, but not always, forwardlooking statements can be
identified by the use of forwardlooking words such as "plans",
"expects" or "does not expect", "is expected", "is subject to",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "should", "would",
"might" or "will" be taken, occur or be achieved. Although
Sandstorm and Mariana believe that the expectations reflected in
such forwardlooking statements are reasonable, Sandstorm and
Mariana can give no assurance that such expectations will prove to
be correct. By their nature, forwardlooking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by such forwardlooking
statements.
These factors include, but are not limited to:
the ability to consummate the Combination; the ability to obtain
requisite shareholder and stock exchange approvals and the
satisfaction of other Conditions on the proposed terms and
schedule; the ability of Sandstorm and Mariana to successfully
integrate their respective operations and retain key employees; the
potential impact of the announcement or consummation of the
Combination on relationships, including with employees, suppliers,
customers and competitors; and changes in general economic,
business and political conditions. Other unknown or unpredictable
factors could cause actual results to differ materially from those
in the forwardlooking statements. Such forwardlooking statements
should therefore be construed in the light of such factors. Neither
Sandstorm nor Mariana, nor any of their respective associates or
directors, officers or advisers, provides any representation,
assurance or guarantee that the occurrence of the events expressed
or implied in any forwardlooking statements in this Announcement
will actually occur. You are cautioned not to place undue reliance
on these forwardlooking statements. Other than in accordance with
their legal or regulatory obligations (including, but not limited
to, the AIM Rules), neither Sandstorm nor Mariana is under any
obligation, and Sandstorm and Mariana expressly disclaim any
intention or obligation, to update or revise any forwardlooking
statements, whether as a result of new information, future events
or otherwise.
With respect to statements on the Sandstorm
Forecast, which is included for the purposes outlined herein,
readers are cautioned that the information may not be appropriate
for other purposes.
No profit forecasts or estimates or
quantified financial benefits statement
Other than in respect of the Sandstorm Forecast,
no statement in this Announcement is intended as a profit forecast,
profit estimate or quantified financial benefits statement and no
statement in this Announcement should be interpreted to mean that
earnings per Mariana Share or Sandstorm Share for the current or
future financial years would necessarily match or exceed the
respective historical published earnings per Mariana Share or
Sandstorm Share or to mean that the Combined Group's earnings in
the first twelve months following the Combination, or in any
subsequent period, following the Combination would necessarily
match, or be greater than or be less than, those of Mariana and/or
Sandstorm for the relevant preceding financial period or any other
period.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is
interested in 1% or more of any class of relevant securities of an
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who
is, or becomes, interested in 1% or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to
an agreement or understanding, whether formal or informal, to
acquire or control an interest in relevant securities of an offeree
company or a securities exchange offeror, they will be deemed to be
a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made
by the offeree company and by any offeror and Dealing Disclosures
must also be made by the offeree company, by any offeror and by any
persons acting in concert with any of them (see Rules 8.1, 8.2 and
8.4). Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on website and SEDAR
A copy of this Announcement will be made
available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, on Sandstorm's website at
http://www.sandstormgold.com and Mariana's website at
http://www.marianaresources.com by no later than 12 noon (London
time) on the Business Day following this Announcement. For the
avoidance of doubt, the contents of these websites are not
incorporated by reference and do not form part of this
Announcement.
This Announcement will also be available on
SEDAR under Mariana's profile at www.sedar.com.
Requesting hard copy documents
In accordance with Rule 30.3 of the Code, a
person so entitled may request a hard copy of this Announcement by
contacting RFC Ambrian Limited during business hours on +44 (0)203
440 6800 or by submitting a request in writing to RFC Ambrian
Limited at Level 5, Condor House, 10 St Paul's Churchyard, London,
EC4M 8AL. For persons who receive a copy of this Announcement in
electronic form or via a website notification, a hard copy of this
Announcement will not be sent unless so requested. You may also
request that all future documents, announcements and information to
be sent to you in relation to the Combination should be in hard
copy form.
Electronic Communications
Please be aware that addresses, electronic
addresses and certain other information provided by Mariana
Shareholders, persons with information rights and other relevant
persons for the receipt of communications from Mariana may be
provided to Sandstorm during the offer period as required under
Section 4 of Appendix 4 of the Code to comply with Rule
2.11(c).
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Code:
· Mariana
confirms that as at the date of this Announcement it has in issue
and admitted to trading on AIM and TSXV 126,231,768 ordinary shares
of 0.1p each (save for 1,977,812 Mariana Shares which have been
issued and are expected to be admitted to trading on AIM and TSXV
on or around 27 April 2017). The ISIN of the ordinary shares is
GG00BD3GC324.
· Sandstorm
confirms that as at the date of this Announcement it has in issue
and admitted to trading on TSX and NYSE MKT 151,994,269 common
shares of no par value. The ISIN of the common shares is
CA80013R2063.
· Sandstorm
confirms that as at the date of this Announcement it has in issue
and admitted to trading on TSX 5,002,500 common share purchase
warrants with an exercise price of US$14.00 per common share that
expire on 7 September 2017. The ISIN of the warrants is
CA80013R1313.
· Sandstorm
confirms that as at the date of this Announcement it has in issue
and admitted to trading on TSX 5,043,900 common share purchase
warrants with an exercise price of US$4.00 per common share that
expire on 3 November 2020. The ISIN of the warrants is
CA80013R1644.
Rounding
Certain figures included in this Announcement
have been subjected to rounding adjustments. Accordingly, figures
shown for the same category presented in different tables may vary
slightly and figures shown as totals in certain tables may not be
an arithmetic aggregation of figures that precede them.
Advisory
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION,
IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH
JURISDICTION
THIS ANNOUNCEMENT CONTAINS INSIDE
INFORMATION
FOR IMMEDIATE RELEASE
26 April 2017
Recommended Combination
of
Mariana Resources Limited ("Mariana")
and
Sandstorm Gold Ltd ("Sandstorm")
1
Introduction
The board of directors of Sandstorm and the
Mariana Independent Directors are pleased to announce that they
have reached agreement on the terms of a recommended share and cash
acquisition by which the entire issued and to be issued ordinary
share capital of Mariana that Sandstorm does not already own will
be acquired by Sandstorm. It is intended that the Combination will
be implemented by way of a court-sanctioned scheme of arrangement
under Part VIII of the Companies (Guernsey) Law.
Sandstorm, together with its concert parties, is
currently interested in 8,980,243 Mariana Shares, representing
approximately 7.0 per cent. of the issued ordinary share capital of
Mariana.
If successful, the Combination will result in
Mariana Shareholders, together, owning approximately 19.0 per cent.
of the share capital of the Combined Group, calculated by reference
to the fully diluted issued share capital of Mariana net of
Sandstorm's interests in Mariana Shares and Mariana Warrants.
2
The Combination
Under the Scheme, which will be subject to the
Conditions and further terms set out in Appendix 1 to this
Announcement and to be set out in the Scheme Document, Scheme
Shareholders will receive:
| for
each Scheme Share |
0.2573
New Sandstorm Shares and 28.75 pence in cash |
|
|
|
Based on the closing price of US$4.04 per
Sandstorm Share on NYSE MKT and a currency exchange rate of £0.7788
per US$, on 25 April 2017 (being the last Business Day before the
date of this Announcement), the terms of the Combination
represent:
- a value of approximately 109.71 pence per Mariana Share;
- a value of approximately £166.85 million for Mariana's fully
diluted ordinary share capital;
- a premium of approximately 84.38 per cent. to the closing price
of 59.5 pence per Mariana Share on AIM on 25 April 2017 (being the
last Business Day before the date of this Announcement); and
- a premium of approximately 88.30 per cent. to the 20-day VWAP
per Mariana Share of 62.84 pence on AIM to 25 April 2017 (being the
last Business Day before the date of this Announcement), based on
the 20-day VWAP per Sandstorm Share of 348.16 pence on NYSE MKT to
the same date and utilising daily close composite exchange
rates.
If, after the date of this Announcement, any
dividend and/or other distribution is announced, declared or paid
in respect of the Mariana Shares, Sandstorm reserves the right to
reduce the Consideration by an amount up to the amount of such
dividend and/or distribution so announced, declared or paid.
3
Background to and reasons for the Combination
The Boards of Mariana and Sandstorm believe that
the Combination will create a leading mid-tier streaming and
royalty company, delivering significant benefits to the
shareholders of the Combined Group. Sandstorm brings a strong
production base, a quality development pipeline with compelling
cash flow growth potential, a base of exploration assets that
provide long-term optionality, a healthy balance sheet for
continued growth and an experienced management team. The Mariana
assets will complement Sandstorm's established Stream and Royalty
Portfolio.
Strong production base
During the financial year ended 31 December
2016, Sandstorm reported sales of 49,731 attributable gold
equivalent ounces from streams and royalties on 20 producing
assets. The average cash cost per ounce of gold was US$258 during
the period resulting in cash operating margins of US$996 per ounce.
Based on Sandstorm's existing streams and royalties, attributable
gold equivalent production for 2017 is forecasted to be between
45,000 and 55,000 attributable gold equivalent ounces from 20
producing assets, providing diversification benefits to
shareholders. During the first quarter of 2017, Sandstorm sold
approximately 15,500 attributable gold equivalent ounces, a record
for the company. Sandstorm's production base is diverse by asset as
well as geography, with an estimated breakdown of forecast gold
equivalent production in 2019 by jurisdiction as follows: 46% North
America, 44% South America, 10% Other.
High quality development pipeline
The addition of Hot Maden to the Combined Group
is expected to improve the already high quality development
pipeline in Sandstorm's Stream and Royalty Portfolio. Prior to
completion of the Combination, the Stream and Royalty Portfolio
includes 20 currently producing and 23 development-stage projects.
Hot Maden would add an anchor asset to the development pipeline and
transforms the potential future production growth for the Combined
Group. Assuming completion of the Combination, the Combined Group
is expected to realise attributable gold equivalent production by
year as follows1:
|
Calendar Year |
Combined Group Attributable Gold Equivalent Production Estimate
(ounces) |
|
2017 |
45,000 - 55,000 |
|
2018 |
56,200 |
|
2019 |
61,600 |
|
2020 |
65,200 |
|
2021 |
98,400 |
|
2022 |
135,700 |
|
2023 |
129,400 |
| 1 Estimates of gold-equivalent production reflect metal
price assumptions of US$1,250 per ounce of gold, US$18.00 per ounce
of silver and US$2.65 per pound of copper. |
The attributable gold equivalent production of
the Combined Group represents Sandstorm's estimates of gold
equivalent production associated with the existing Stream and
Royalty Portfolio plus the addition of gold equivalent production
estimated from Hot Maden. In the case of the existing Stream and
Royalty Portfolio, the figures represent estimated future
production for each mine at which Sandstorm has a commodity stream
or royalty based on public disclosure, technical reports and
incorporating management estimates where appropriate. Information
regarding the Hot Maden Project has been derived from the Hot Maden
PEA and incorporating management estimates. The Hot Maden PEA is
preliminary in nature as it includes inferred mineral resources
that are considered too speculative geologically to have the
economic considerations applied to them that would enable them to
be categorized as mineral reserves. Mineral resources that
are not mineral reserves do not have demonstrated economic
viability, and as such there is no certainty that the preliminary
assessment and economics will be realised.
Sandstorm believes that the addition of Hot
Maden to the Combined Group will provide the potential to more than
double attributable gold equivalent production once in full
operation. It is estimated that full production may be achieved by
2022, with a half-year of production occurring as early as 2021
during the commissioning phase. Hot Maden is envisaged as a
conventional underground mine and processing facility producing
concentrates without the use of cyanide. The Hot Maden PEA released
by Mariana (effective date of 1 March 2017) demonstrated robust
estimated economics with an after-tax IRR in excess of 100% and
all-in sustaining costs below US$400 per ounce on a gold-equivalent
basis (as referred to in the Mariana press release dated 17 January
2017). The high-grade nature of the orebody and the wide intercepts
of mineralisation provide the potential for low-cost mining
methods. Furthermore, the drilling conducted to date has only
covered a portion of the total project area, providing for the
potential for exploration success in the future. At present there
are three drill rigs on site with a plan to complete 20,000 metres
of exploration and infill drilling during 2017.
Sandstorm believes that converting the Hot Maden
JV into a gold stream at the appropriate time would present the
best opportunity to unlock the value of Mariana's minority
incorporated JV interest for shareholders in the Combined Group.
Gold stream and royalty companies typically trade at higher
valuation multiples than mining companies, and the cash flow from
Hot Maden would be expected to command a superior valuation as part
of a diversified Stream and Royalty Portfolio within the Combined
Group rather than within a junior mining company.
The operator of Hot Maden, Lidya, is an
experienced Turkish company and is part of Çalik Holding, a Turkish
conglomerate with several business lines including energy,
telecommunication, finance, construction, textiles and mining. In
the half-year ended 30 June 2016, Çalik Holding reported net income
of approximately US$228 million (665 million Turkish Lira converted
at the average TRY/US$ exchange rate of 2.92 TRY/US$ during the
six-month period ending 30 June 2016). Lidya is currently a
joint-venture partner with Alacer Gold Corp. on the producing
Çöpler mine (80% Alacer, 20% Lidya) and the development-stage
Gediktepe and Kartaltepe projects (both 50% Alacer, 50% Lidya) in
Turkey.
Exploration optionality
Sandstorm's Stream and Royalty Portfolio
includes 112 exploration stage assets and, among them, 26 are
considered to be advanced-stage exploration projects. The royalties
on the exploration properties provide shareholders of the Combined
Group with meaningful optionality for future mineral discoveries.
The addition of Mariana's Exploration Properties complements the
exploration optionality in the Stream and Royalty
Portfolio.
The Combined Group will not be an active
exploration company and, therefore, after the Combination,
Sandstorm intends to spin-out the Exploration Properties into a
separate SpinCo, with the Combined Group retaining its royalty
interests over the Exploration Properties together with equity in
the SpinCo. Sandstorm intends that the SpinCo would seek external
investment, as required, to fund future exploration costs, with a
goal of allowing shareholders in the Combined Group to retain an
interest in the Exploration Properties without the Combined Group
being required to fund exploration expenses.
Financial strength and future growth
Sandstorm has a strong balance sheet with
working capital of US$23.8 million and no bank debt as of 31
December 2016. In addition, Sandstorm has a portfolio of equity and
debt investments in other mining companies and a US$110 million
revolving line of credit. Sandstorm's investments and its access to
the revolving line of credit, along with the free cash flow
generated from the Stream and Royalty Portfolio, will be used along
with Mariana's acquired cash balance to fund future stream and
royalty acquisitions in order to continue growing and diversifying
the Combined Group's asset base as well as funding its share of pro
rata cash calls for the development of the Hot Maden asset.
Other benefits
As a junior mining company, and as a function of
the subdued investor appetite during the last few years in
the resource sector, Mariana has been unable to attract large
institutional investors. Conversely, more than 50% of Sandstorm's
investor base is made up of institutional investors and Sandstorm
has averaged approximately US$10 million in daily US$ trading
volume since January 2016.
With the addition of the Mariana assets to the
Stream and Royalty Portfolio, the Combined Group expects to see
increased institutional investor interest, improved liquidity and
the potential for a lower cost of capital.
The Combined Group expects to realise cost
saving synergies with elimination of ongoing listing fees
associated with Mariana's listing on the TSXV and admission to
trading on AIM. In addition, following any spin-out of the
Exploration Properties, if the SpinCo were to be successful in
raising external investment, the Combined Group would no longer be
required to fund ongoing exploration costs associated with the
Exploration Properties.
4
Recommendation of the Mariana Independent Directors
The Mariana Independent Directors, who have been
so advised by RFC Ambrian as to the financial terms of the
Combination, consider the Combination to be fair and reasonable. In
providing their advice, RFC Ambrian have taken into account the
commercial assessments of the Mariana Independent Directors. RFC
Ambrian is providing independent financial advice to the Mariana
Independent Directors for the purposes of Rule 3 of the Code.
The Mariana Independent Directors have also been
advised by Raymond James Ltd. as to the financial terms and certain
Canadian capital market aspects of the Combination.
Accordingly, the Mariana Independent Directors
have unanimously approved the Combination and intend to recommend
that Mariana Shareholders vote in favour of the Scheme at the
Guernsey Court Meeting and the resolutions to be proposed at the
General Meeting as they have irrevocably undertaken to do in
respect of their own beneficial holdings of, in aggregate, 905,050
Mariana Shares representing approximately 0.71 per cent. of the
issued ordinary share capital of Mariana on 25 April 2017 (being
the last Business Day prior to the date of this Announcement).
In light of their ongoing participation in the
Combined Group and the related remuneration and incentivisation
arrangements referred to in paragraph 10 below, neither Glen
Parsons nor Eric Roth, each of whom are Mariana Directors, have
played any part in the consideration of the Combination or the
recommendation of it by the Mariana Independent Directors.
Ron Ho, who is both a director of Mariana and
Vice President, Finance of Sandstorm, has played no part in the
consideration of the Combination or the recommendation of it by the
Mariana Independent Directors.
Mustafa Aksoy, who is both a director of Mariana
and a board member and managing director of Lidya, has played no
part in the consideration of the Combination or the recommendation
of it by the Mariana Independent Directors.
5
Background to and reasons for the recommendation of the Mariana
Independent Directors
The Independent Directors of Mariana intend to
recommend the Combination of Sandstorm and Mariana as it de-risks
the Mariana Shareholders' exposure to a single
development/production asset, whilst allowing exposure to a wider
diverse portfolio of assets, through the stock component of the
Combination. Mariana Shareholders will still retain significant
exposure to the upside potential of its current assets, which as a
result of the Combination should reduce the financing risk of
development given the size and financial strength of Sandstorm.
The Consideration under the Combination is also
at a premium to the current market price of Mariana Shares, as well
as the recent historical performance.
The liquidity of Sandstorm Shares provide an
opportunity to realise the value of the New Sandstorm Share
Consideration Amount and, if Mariana Shareholders so choose, to
benefit from any potential upside to Sandstorm's market value.
6
Irrevocable Undertakings
The Mariana Independent Directors have
irrevocably undertaken to Sandstorm to vote in favour of the Scheme
at the Guernsey Court Meeting and the resolutions to be proposed at
the General Meeting in respect of, in aggregate, 905,050 Mariana
Shares representing approximately 0.71 per cent. of the issued
ordinary share capital of Mariana on 25 April 2017 (being the last
Business Day prior to the date of this Announcement).
In addition to the irrevocable undertakings from
the Mariana Independent Directors, Sandstorm has also received
irrevocable undertakings from each of Australian Investors Pty Ltd
and AngloGold Ashanti Holdings Plc to vote in favour of the Scheme
at the Guernsey Court Meeting and the resolutions to be proposed at
the General Meeting in respect of, in aggregate, 8,718,089 Mariana
Shares, representing approximately 6.80 per cent. of the issued
ordinary share capital of Mariana on 25 April 2017 (being the last
Business Day prior to the date of this Announcement).
Sandstorm has therefore received irrevocable
undertakings to vote in favour of the Scheme at the Guernsey Court
Meeting and the resolutions to be proposed at the General Meeting
in respect of, in aggregate, 9,623,139 Mariana Shares representing,
in aggregate, approximately 7.51 per cent. of the issued ordinary
share capital of Mariana on 25 April 2017 (being the last Business
Day prior to the date of this Announcement).
Further details of these irrevocable
undertakings are set out in Appendix 3 to this Announcement. If the
Combination is subsequently structured as a takeover offer, all the
above undertakings will take effect as irrevocable undertakings to
accept such offer.
Glen Parsons and Eric Roth have also irrevocably
undertaken to Sandstorm to vote in favour of those resolutions to
be proposed at the General Meeting on which they are entitled to
vote in respect of, in aggregate, 986,621 Mariana Shares
representing approximately 0.77 per cent. of the issued ordinary
share capital of Mariana on 25 April 2017 (being the last Business
Day prior to the date of this Announcement). As a consequence of
the Retention Arrangements, Glen Parsons and Eric Roth will not
vote on the resolution to approve the Scheme at the Guernsey Court
Meeting.
Neither of Ron Ho or Mustafa Aksoy has given an
irrevocable undertaking Sandstorm on the basis that: (i) Ron Ho is
an employee of Sandstorm; and (ii) Mustafa Aksoy does not hold any
Mariana Shares.
7
Information relating to Sandstorm
Introduction
Sandstorm is a public corporation incorporated
under the laws of the province of British Columbia, Canada with its
headquarters in Vancouver, British Columbia. The Sandstorm Shares
are currently listed on the TSX (symbol: SSL) and the NYSE MKT
(symbol: SAND). Sandstorm has two series of publicly traded
warrants that are listed for trading on the TSX (symbols: SSL.WT.B
and SSL.WT). Sandstorm has a basic market capitalization of
approximately US$614.06 million based upon the closing price of
US$4.04 for a Sandstorm Share on the NYSE MKT on 25 April 2017 (the
last Business Day prior to the date of this Announcement).
As at 31 December 2016, Sandstorm had total
assets of US$534.9 million, including cash and cash equivalents of
US$21.4 million, investments of US$61.3 million and loans
receivable of US$23.4 million, shareholders' equity of US$527.3
million and Sandstorm had no outstanding third party debt (other
than accounts payable in the ordinary course of business) with
additional available liquidity from its US$110 million revolving
credit facility.
Sandstorm provides financing to mining companies
through stream and royalty agreements. Stream and royalty finance
involves Sandstorm making an upfront payment to a mining partner
that is in need of capital to build their mine, refinance their
obligations, complete an acquisition or for various other reasons.
In exchange for that upfront payment, Sandstorm receives the right
to purchase a percentage of the gold produced from the mine (in the
case of a stream) or a portion of the revenue generated from the
mine (in the case of a royalty). Since 2009, Sandstorm has compiled
a portfolio of 155 streams and royalties, of which 20 of the
underlying mines are currently producing. Sandstorm plans to
continue growing the company through accretive acquisitions of gold
streams and royalties.
Financial Highlights
Highlights for the year ending 31 December
2016:
- Attributable gold equivalent ounces sold of 49,731 ounces (FY
2015 - 45,146 ounces);
- Revenue of US$62.4 million (FY 2015 - US$52.7 million);
- Average cash cost per attributable gold equivalent ounce of
US$258 resulting in cash operating margins of US$996 per ounce (FY
2015 - US$300 per ounce and US$867 per ounce respectively);
- Operating cash flow of US$39.0 million (FY 2015 - US$30.8
million);
- Net income of US$25.3 million; and
- The acquisition of the Teck Royalty Package for consideration
of US$16.8 million, of which US$1.4 million was paid in cash and
US$15.4 million in Sandstorm Shares. The transaction provides asset
diversification, immediate cash flow and significant cash flow
growth potential.
Sandstorm's attributable gold equivalent ounces
sold during the 5-year period ending 31 December 2016 is shown
below:
|
Calendar Year |
Attributable Gold Equivalent Production (Ounces) |
|
2012 |
33,514 |
|
2013 |
42,709 |
|
2014 |
44,821 |
|
2015 |
45,146 |
|
2016 |
49,731 |
The following table summarizes the ounces of
gold sold and the respective revenue received by Sandstorm from
each of its producing gold interests for the year ended 31 December
2016:
|
Property |
Gold Equivalent Ounces Sold |
Sales & Royalty Revenue (US$000s) |
|
Bachelor Lake Mine |
7,358 |
9,183 |
|
Black Fox Mine |
4,500 |
5,617 |
|
Chapada Mine |
4,839 |
6,075 |
|
Diavik Mine |
4,669 |
5,856 |
|
Karma |
3,334 |
4,272 |
|
Ming Mine |
1,586 |
2,025 |
|
Santa Elena |
9,419 |
11,772 |
|
Yamana Silver Stream |
2,323 |
2,926 |
|
Other |
11,703 |
14,645 |
|
Total |
49,731 |
62,371 |
During the year ending 31 December 2016,
Sandstorm reported record attributable gold equivalent production
during the fourth quarter and twelve months of 2016, translating to
significant growth in revenue. Revenue for the full 2016 year was
up 18% when compared to 2015 and revenue during the fourth quarter
increased by 67% when compared to Q4, 2015. The marked increase in
Q4 was a result of a 13% rise in the average realized selling price
of gold and a 48% increase in attributable gold equivalent ounces
sold. Contributions from the Yamana silver stream, Chapada copper
stream, Teck Royalty Package and Karma gold stream were the main
drivers of the growth in gold equivalent ounces, all of which were
not part of the asset mix in 2015. Precious metal streams and
royalties (including diamonds) accounted for 82% of Sandstorm's
revenue during the year, with the other 18% coming primarily from
base metal projects. During the first quarter of 2017 (three-month
period ending 31 March 2017) Sandstorm sold approximately 15,500
attributable gold equivalent ounces, which is a quarterly record
high for Sandstorm.
Track Record of Growth
Over the past two years (from April 2015),
Sandstorm has completed acquisitions of 103 new streams and
royalties as described below:
|
ClosingPeriod |
Counterparty |
Transaction Value(US$ millions) |
Assets Acquired |
|
April 2015 |
Gold Royalties Inc. |
$4.8 |
13 royalties |
|
June 2015 |
Pacific Ridge Exploration Ltd. |
$0.5 |
3 royalties |
|
October 2015 |
Yamana Gold Inc. |
$152 |
2 streams and 1 royalty |
|
October 2015 |
Alexandria Minerals Corp. |
$1 |
2 royalties |
|
January 2016 |
Teck Resources Ltd. |
$17 |
52 royalties |
|
February 2016 |
Alto Parana Royalty |
$nil |
1 royalty |
|
April 2016 |
Erdene Resource Development Corp. |
$1.2 |
2 royalties |
|
September 2016 |
Norilsk Nickel |
$3.5 |
5 royalties |
|
January 2017 |
Condor Resources Inc. |
$0.4 |
8 royalties |
|
January 2017 |
Kivalliq Energy Corp. |
$0.7 |
1 royalty |
|
March 2017 |
Pembrook Copper Corp. |
$0.4 |
10 royalties |
|
March 2017 |
Tower Resources Ltd. |
$0.4 |
3 royalties |
2017 Outlook
Based on Sandstorm's existing gold streams and
royalties, attributable gold equivalent production for 2017 is
forecast to be between 45,000 and 55,000 attributable gold
equivalent ounces.
The Sandstorm Forecast in Appendix 4 of this
Announcement sets out Sandstorm's operating cash flow after tax
(and before corporate overhead) forecasts to 2021.
8
Information relating to Mariana
Introduction
Mariana is a non-cellular company incorporated
under the laws of Guernsey with its registered office in Guernsey.
Mariana is not regulated by the Guernsey Financial Services
Commission. The Mariana Shares are currently admitted to trading on
AIM (symbol: MARL) and the TSX-Venture (symbol: MARL). Mariana has
a market capitalisation of approximately £76.28 million based upon
the closing price of 59.5 pence per Mariana Share on AIM on 25
April 2017, being the last Business Day before this
Announcement.
As at 31 December 2016, Mariana had total assets
of £13.6 million, cash and cash equivalents of £5.2 million and
shareholders' equity of £12.7 million.
Mariana is an exploration and development
company with an extensive portfolio of gold, silver, and copper
projects in Turkey, South America and Côte d'Ivoire. Mariana's most
advanced asset is the Hot Maden gold-copper project in northeast
Turkey, which is a joint venture with Turkish partner Lidya
Madencilik (30% Mariana and 70% Lidya). The JV holds 1 operating
licence and 3 exploration licences comprising a total land area of
73.9 km2. On 17 January 2017, Mariana released the results of the
Hot Maden PEA which demonstrated positive potential economics
(after-tax NPV and IRR of US$1.37 billion and 153%, respectively)
based on a development scenario incorporating a 1.0 Mtpa
underground mining operation and processing facility for the
production of two concentrates (a copper-gold concentrate and a
gold-pyrite concentrate).
The Hot Maden PEA was based on the June 2016
mineral resource estimate completed by RPM, which calculated
resources (100% basis) by category of:
- Indicated (Main Zone): 7.1 Mt grading 12.2 g/t gold and 2.3%
copper for contained metal of 2.79 Moz of gold and 166 kt of copper
(3.43 Moz of gold equivalent).
- Inferred (Main Zone): 0.7 Mt grading 2.7 g/t gold and 0.9%
copper for contained metal of 0.06 Moz of gold and 7 kt of copper
(0.09 Moz of gold equivalent).
- Inferred (Southern Zone): 1.4Mt grading 7.2 g/t gold and 0.7%
copper for contained metal of 0.31 Moz of gold and 10 kt of copper
(0.35 Moz gold equivalent).
Elsewhere in Turkey, Mariana holds a 100%
interest in the Ergama gold-copper project.
On 7 October 2016, Mariana announced the signing
of a binding term sheet to acquire an indirect 80% interest in Côte
d'Ivoire-focused private exploration company Awalé. Through the
transaction Mariana will gain an immediate foothold in an
established exploration portfolio with known gold mineralisation
and artisanal gold workings, and which comprises i) 3 granted
contiguous licences (1,191 km2) in the Bondoukou area, and ii) 4
licences under application (1,593 km2) in both the Bondoukou and
Abengourou areas. The Boundoukou concessions lie along the
southwestern extension of the Birimian Bole-Nangodi greenstone belt
in adjacent Ghana, host to a number of high grade orogenic gold
deposits including Namdini (owned by Cardinal Resources) and Youga
(owned by MNG/Endeavor).
In southern Argentina, Mariana's core
gold-silver projects are Las Calandrias (100%), Sierra Blanca
(100%), Los Cisnes (100%), and Bozal (100%). These projects are
part of a 1,000+ km2 land package in the Deseado Massif epithermal
gold-silver district in mining-friendly Santa Cruz Province.
In Suriname, Mariana has a direct holding of
10.2% of the Nassau Gold project. The Nassau gold project is a 280
km2 exploration concession located approximately 125 km SE of the
capital Paramaribo and immediately adjacent to Newmont Mining's
4.2Moz gold Merian project.
Mariana is focusing on acquiring new
opportunities which complement its current portfolio.
Hot Maden Selected Drill Results
A total of 107 drill holes have been completed
and reported on the Hot Maden project, a selection of drill results
is presented below demonstrating the high-grade nature of the
orebody and the large widths of intercepts:
|
Hole # |
From (m) |
To (m) |
Intercept (m) |
Au Grade (g/t) |
Cu Grade (%) |
|
HTD-04 |
25.0 |
128.0 |
103.0 |
9.0 |
2.17 |
|
HTD-05 |
150.0 |
163.0 |
13.0 |
88.0 |
2.46 |
|
HTD-15 |
216.0 |
333.3 |
117.3 |
13.9 |
2.04 |
|
HTD-18 |
292.0 |
400.2 |
108.2 |
3.0 |
1.35 |
|
HTD-34 |
55.0 |
126.0 |
71.0 |
32.7 |
1.90 |
|
HTD-35 |
46.8 |
110.4 |
63.6 |
14.5 |
3.40 |
|
HTD-60 |
167.0 |
250.3 |
83.3 |
15.9 |
1.57 |
|
HTD-62 |
36.5 |
132.0 |
95.5 |
32.1 |
3.30 |
|
HTD-65 |
330.5 |
417.0 |
86.5 |
3.4 |
1.44 |
|
HTD-71 |
210.0 |
279.6 |
69.6 |
62.7 |
2.68 |
|
HTD-72 |
180.5 |
215.0 |
34.5 |
19.4 |
1.31 |
|
HTD-77 |
96.0 |
186.0 |
90.0 |
22.6 |
4.39 |
|
HTD-78 |
294.0 |
373.0 |
79.0 |
14.3 |
1.59 |
|
HTD-85 |
209.4 |
270.0 |
60.6 |
82.2 |
1.44 |
|
HTD-88 |
326.0 |
400.0 |
74.0 |
3.0 |
1.57 |
|
HTD-88 |
422.0 |
451.0 |
29.0 |
0.3 |
1.31 |
Hot Maden Preliminary Economic
Assessment
The Hot Maden PEA was prepared in accordance
with NI 43-101 by independent mining consultant firm RPM and is
available on Mariana's SEDAR profile at www.sedar.com. Readers
should refer to the Hot Maden PEA for additional information,
including data verification and exploration information.
Note that the Hot Maden PEA is preliminary in
nature as it includes inferred mineral resources that are
considered too speculative geologically to have the economic
considerations applied to them that would enable them to be
categorized as mineral reserves. Mineral resources that are not
mineral reserves do not have demonstrated economic viability, and
as such there is no certainty that the preliminary assessment and
economics will be realised.
The JV will continue to work on the technical
studies and optimisations required to complete the PFS, which is
anticipated to be completed during Q4 2017. The PFS will provide
higher confidence level mine designs, mineral processing scenarios,
and costing estimates for the Hot Maden project. Therefore, the
result could change over time based on the updated prices, resource
and assumptions.
Summary of the Hot Maden PEA (100% Project
Basis)
- Conceptual development for Hot Maden assumes an all underground
mining operation from a decline and utilizing mechanized transverse
and longitudinal long hole open stoping with engineered fill mining
methods. Mining and processing rates of 0.8 Mtpa, 1.0 Mtpa, and 1.2
Mtpa were considered, with the base case mining scenario being
established at 1.0 Mtpa;
- Total metal contained in ore processed of 2.67 Moz of gold and
142 kt of copper over a total project life of 9 years for the base
case mining scenario;
- Metallurgical test work, through flotation and concentration,
completed to date on the high grade Main Zone mineralisation has
indicated high recoveries of both gold and copper. A variable
processing recovery, dependent on grade, has been applied in the
PEA resulting in a project weighted average recovery of 88% of gold
and 90% of copper;
- Total metal recovered to concentrates of 2.37 Moz of gold and
126 kt of copper;
- Post-tax NPV for the base case mining scenario (1.0 Mtpa) of
US$1.37 billion excluding pre-development exploration costs (8%
discount rate);
- Post-tax IRR for the base case mining scenario of 153%
excluding acquisition costs; and
- Total capex (initial + sustaining) of US$261 million.
PEA Parameters
Key parameters utilized in the Hot Maden PEA are
indicated in the table below:
|
Hot Maden PEA |
Base Case |
|
Mining Method |
Underground |
|
Underground Minable Ore |
7.4Mt grading 11.25 g/t gold and 1.92% copper |
|
Annual Throughput |
Base case established at 1.0 Mtpa |
|
Project Life of Mine |
9 years |
|
Metal Prices |
US$1,250 per ounce gold and US$2.75 per pound copper |
|
Average Recoveries |
88% of gold and 90% of copper |
|
Contained Metal |
2.67 Moz of gold and 142 kt of copper |
|
Recovered to Concentrates |
2.37 Moz of gold and 126 kt of copper |
|
Payable Metal |
2.03 Moz of gold and 117 kt of copper |
|
Upfront Capex |
US$169 million |
|
LOM Project Capex |
US$261 million |
|
Mining Operating Costs |
US$31.05 per tonne processed |
|
Processing Operating Costs |
US$15.13 per tonne processed |
|
G+A Operating Costs |
US$10.18 per tonne processed |
|
Total Cash Costs |
US$303 per ounce gold-equivalent |
|
All-in Sustaining Costs |
US$338 per ounce gold-equivalent |
|
Royalties |
2.60% State Royalties, 2.00% NSR to Sandstorm |
|
Corporate Tax Rate |
20.0% |
Geology and Mineral Resources
The high grade gold-copper mineralisation at Hot
Maden occurs within a N-NE-trending fault zone and is sub-vertical
in nature. At least two styles of gold-copper mineralisation are
evident within the Main Zone: i) the predominant, multiphase
quartz-sulphide (pyrite-chalcopyrite) +/- hematite/jasperoid
breccia bodies, and ii) semi-massive to massive sulphides
(pyrite-chalcopyrite). Host rocks are dominantly andesites and
andesitic breccias. Overall, the highest-grade gold mineralisation
(typically >15 g/t Au but locally >100 g/t Au) at Hot Maden
lies along the eastern margin of the Main Zone. Drilling is ongoing
but the current dimensions of the Main Zone are a strike extent of
300m from north to south, a true width of between 40m and 70m, and
a vertical extension from near surface to >300m depth.
Stratabound Zn(-Pb) (sphalerite-galena) mineralisation also flanks
the Main Zone to the east and locally to the west. In the new
Southern Vein Field discovery, host rocks are dominantly dacitic
breccias and gold-copper mineralisation is associated with
quartz-sulphide-bearing veins and vein breccias.
Initial exploration drilling has commenced in
the old Russian mining area, south of the Southern Vein Field.
The Hot Maden PEA was based on the June 2016
mineral resource estimate prepared by RPM, which used 52 diamond
drill holes for a total of 14,862m (3,748m within wireframes) and
included contributions from both the Main Zone and a new Southern
Discovery, comprising (on a 100% basis):
| Hot Maden Mineral Resource Estimate - Main
Gold-Copper Zone (2g/t AuEq Cut-Off) |
|
|
Indicated Mineral Resource |
|
Domain |
Tonnes(kt) |
Au(g/t) |
Cu(%) |
Zn(%) |
AuEq(g/t) |
Au(koz) |
Cu(kt) |
AuEq(koz) |
|
Main Zone LG |
463 |
1.1 |
1.1 |
0.3 |
2.4 |
17 |
5 |
36 |
|
Main Zone HG |
4,501 |
3.9 |
1.9 |
0.2 |
6.3 |
570 |
87 |
908 |
|
Main Zone UHG |
2,086 |
32.7 |
3.5 |
0.1 |
36.9 |
2,195 |
73 |
2,476 |
|
Mixed Gold-Zinc Zone |
17 |
7.5 |
3.1 |
3.6 |
11.2 |
4 |
1 |
6 |
|
Peripheral Lodes |
60 |
2.1 |
0.4 |
0.4 |
2.5 |
4 |
- |
5 |
|
Total |
7,127 |
12.2 |
2.3 |
0.2 |
15.0 |
2,790 |
166 |
3,431 |
|
|
|
|
|
|
|
|
|
|
|
|
Inferred Mineral Resource |
|
Domain |
Tonnes(kt) |
Au(g/t) |
Cu(%) |
Zn(%) |
AuEq(g/t) |
Au(koz) |
Cu(kt) |
AuEq(koz) |
|
Main Zone LG |
395 |
1.7 |
0.9 |
0.03 |
2.8 |
21 |
4 |
35 |
|
Main Zone HG |
31 |
3.9 |
1.6 |
0.1 |
5.8 |
4 |
- |
6 |
|
Main Zone UHG |
6 |
39.1 |
2.1 |
0.01 |
41.6 |
7 |
- |
8 |
|
Mixed Gold-Zinc Zone |
4 |
1.7 |
0.4 |
2.4 |
2.2 |
- |
- |
- |
|
Peripheral Lodes |
282 |
3.2 |
0.9 |
0.1 |
4.3 |
29 |
2 |
38 |
|
Total |
718 |
2.7 |
0.9 |
0.1 |
3.8 |
62 |
7 |
88 |
| Hot Maden Mineral Resource Estimate - Southern
Gold-Copper Zone (2g/t AuEq Cut-Off) |
|
|
Inferred Mineral Resource |
|
Domain |
Tonnes(kt) |
Au(g/t) |
Cu(%) |
Zn(%) |
AuEq(g/t) |
Au(koz) |
Cu(kt) |
AuEq(koz) |
|
South Zone LG |
396 |
2.8 |
0.7 |
- |
3.6 |
35 |
3 |
46 |
|
South Zone HG |
583 |
5.3 |
0.7 |
- |
6.1 |
98 |
4 |
114 |
|
South Zone UHG |
224 |
22.2 |
1.0 |
- |
23.4 |
160 |
2 |
169 |
|
Mixed Gold-Zinc Zone |
44 |
9.0 |
1.0 |
3.2 |
10.2 |
13 |
- |
15 |
|
Peripheral Lodes |
104 |
1.9 |
0.3 |
- |
2.2 |
6 |
- |
7 |
|
Total |
1,352 |
7.2 |
0.7 |
0.1 |
8.1 |
313 |
10 |
351 |
In the above resource tables Au Equivalence
(AuEq) was calculated using a 100 day moving average of
US$1,215/ounce for Au and US$2.13/pound for Cu as of 29 May 2016.
No adjustment has been made for metallurgical recovery or net
smelter return as these remain uncertain at this time. Based on
grades and contained metal for Au and Cu, it is assumed that both
commodities have reasonable potential to be economically
extractable. The formula used for Au equivalent grade is: AuEq g/t
= Au + [(Cu% x 22.0462 x 2.13)/(1215/31.1035)] and is not adjusted
for assumed metallurgical recovery. Au equivalent ounces are
calculated by multiplying Mineral Resource tonnage by Au equivalent
grade and converting for ounces. The formula used for Au equivalent
ounces is: AuEq Oz = [Tonnage x AuEq grade (g/t)]/31.1035.
Project Economics Summary
|
Mining Scenario |
Throughput |
Total Capex |
After-Tax NPV8% |
After-Tax IRR |
Payback (incl. dev.) |
ProjectLife |
|
Conservative |
0.8 Mtpa |
US$ 251M |
US$ 1.28B |
130% |
2.2 |
11 |
|
Base Case |
1.0 Mtpa |
US$ 261M |
US$ 1.37B |
153% |
2.1 |
9 |
Bondoukou Project, Côte d'Ivoire
Mariana's acquisition of an 80% interest in
Awalé in October 2016 established a presence in Côte d'Ivoire in a
region which hosts one of the largest known prospective
underexplored greenstone belts in West Africa. The exploration
portfolio targets the eastern border of the country and
comprises:
- 3 granted contiguous licences covering 1,191km2 in the
Boundoukou area, and
- 4 licences under application covering 1,593km2 in both the
Bondoukou and Abengourou area.
Mariana's initial focus will be on the Bondoukou
Est concession, where high grade gold mineralization (up to 36 g/t
Au from initial surface sampling) occurs within a sheeted quartz
vein complex that is located at the contact between a zoned
granitoid intrusion and the host meta-volcanic and meta-sedimentary
rocks. Artisanal miners are currently active at Bondoukou Est and
are undertaking shallow mining (generally up to 30m depth) from
higher grade quartz veins that lie within a broadly NW-SE-trending
mineralized corridor interpreted to have a strike extent of 18 km.
Subsequent field activities will focus on other artisanal workings
within the remainder of the Bondoukou Est concession, as well as
workings in the Bondoukou Nord and Nord Est concessions.
Ergama Project, Turkey
The 100% owned Ergama project licence in
Balikesir province, western Turkey, covers an area of 21.6 km2, and
is located 90km SE of Teck-Pilot Gold's Halilaga gold-copper
project in the highly mineralised Biga Peninsula, and 230 km WNW of
Eldorado Gold's Kisladag gold mine (2016 production of 211,000 oz
gold).
On 29 November 2016, Mariana commenced the
drilling of an initial seven hole diamond drill program being
undertaken by drill contractor Ortadogu Drilling. As at 14 February
2017, three of the seven proposed drill holes (ERD-01 to ERD-03,
for a total of 1,522m) had been completed, with assays having now
been received for the first two holes. Targets to be tested in this
initial drill program include the northern margins of two porphyry
gold-copper targets (the Main Porphyry Target and Porphyry Target
B), in addition to a high grade, vein / fault-hosted epithermal
gold-silver target.
Intercepts from ERD-01 and ERD-02 include:
|
Drill Hole |
From(m) |
To(m) |
Intercept(m) |
Au(g/t) |
Cu(%) |
Comments |
|
|
|
|
|
|
|
|
|
ERD-01 |
43.8 |
109.8 |
66.0 |
0.22 |
<0.1 |
Phyllic altered andesite / diorite porphyry |
|
|
117.8 |
205.8 |
88.0 |
0.19 |
<0.1 |
|
|
215.8 |
237.8 |
22.0 |
0.25 |
<0.1 |
|
|
279.8 |
285.8 |
6.0 |
0.20 |
<0.1 |
|
|
317.8 |
329.8 |
12.0 |
0.20 |
<0.1 |
|
|
373.8 |
383.8 |
10.0 |
0.21 |
<0.1 |
|
|
|
|
|
|
|
|
|
ERD-02 |
57.0 |
198.0 |
141.0 |
0.23 |
<0.1 |
Phyllic altered andesite / diorite porphyry |
|
|
226.0 |
244.0 |
18.0 |
0.18 |
<0.1 |
|
|
274.0 |
330.0 |
56.0 |
0.22 |
<0.1 |
|
|
340.0 |
378.0 |
38.0 |
0.15 |
<0.1 |
|
|
470.0 |
626.4 |
156.4 |
0.25 |
<0.1 |
|
Including |
570.0 |
626.4 |
56.4 |
0.33 |
0.12 |
|
|
|
|
|
|
|
|
The drilling completed to date at Ergama appears
to confirm a conceptual model of a porphyry-style gold-copper
system underlying, and slightly offset from, an essentially barren
quartz-alunite (+/-clay) "lithocap". Drill holes ERD-01 and ERD-02
are the first holes to test this model and, whilst initial results
have been positive, both the observed hydrothermal alteration
assemblages and general increase in gold-copper grades towards the
south are suggesting that the key potassic zone (and likely the
most metal-rich part of the system) is located to the south of
current drilling. Permitting of drill holes in this area is
currently in progress, with drilling expected to be undertaken as
soon as the permits are granted.
Argentina Assets
The Las Calandrias project is currently
Mariana's most advanced exploration asset in Argentina. Initial
exploration in 2008 led to the Calandria Sur discovery in 2009. The
Calandria Sur deposit represents the first bulk tonnage epithermal
(rhyolite dome hosted) gold-silver discovery in the Deseado Massif.
High grade epithermal gold-silver mineralization has also been
delineated in the Calandria Norte vein / breccia system. In 2011,
Mariana reported the following maiden global mineral resource
estimate for the Las Calandrias project:
- Indicated: 11.8 Mt grading 1.0 g/t gold and 17.4 g/t silver for
contained metal of 381,000 oz of gold and 6.6 Moz of silver.
- Inferred: 0.9 Mt grading 0.9 g/t gold and 5.2 g/t silver for
contained metal of 25,900 oz of gold and 144,000 oz of silver.
This maiden resource consisted of contributions
from both the bulk tonnage / disseminated Calandria Sur deposit and
the high grade Calandria Norte vein / breccia system (162,000 t
grading 9.35 g/t gold). Ongoing field activities are focused on
deep sensing geophysics and the evaluation of 4 high grade
gold-silver vein / breccia systems located in the vicinity of the
Calandria Norte vein (the La Morena, El Nido Norte, Las Calandrias
Feeders, and Refugio target areas).
The Sierra Blanca project is located in the
western portion of the Deseado Massif. Mariana has been focused on
the identification and delineation of high grade gold-silver shoots
within the 22 km strike extent of the poorly explored, intermediate
sulphidation epithermal vein system. Exploration to date has
identified bonanza grade silver in the oxidized / supergene
enriched central portion of the Chala vein, with assays from
channel sampling attaining up to 7,600 g/t Ag and 25.7 g/t Au. An
internal resource has been achieved with expansion potential.
The Los Cisnes project is a prospect that was
generated from Mariana's regional greenfield exploration in 2012
which was focused on rhyolite dome potential in the eastern Deseado
Massif. The project is located approximately 120 km SSE of Las
Calandrias and 75 km SW of Yamana's Cerro Moro project. The El Brio
target is a 700m long vein / breccia zone up to 3m in width, with 9
surface samples returning grades between 31 and 3,849 g/t silver.
The El Solar target is a Calandrias-style rhyolite dome hosted
system with bulk tonnage potential, with float samples returning
0.5 - 3.4 g/t gold.
9
Financing
The cash consideration payable under the terms
of the Combination will be funded from existing cash resources
available to Sandstorm, including funds which have been drawn down
under Sandstorm's existing US$110 million revolving credit
facility.
KPMG is satisfied that sufficient resources are
available to Sandstorm to satisfy in full the cash consideration
payable to Scheme Shareholders under the terms of the
Combination.
10
Directors, management and employees
Sandstorm recognizes the skills, technical
ability and industry knowledge and experience of the Mariana Board,
management and employees and in particular acknowledges the
valuable work that each has performed to advance the Hot Maden
project. Accordingly, Sandstorm expects that certain members of
Mariana's management will continue with the development of the
Combined Group.
Following completion of the Combination, a
thorough assessment of the available skill sets of Mariana's
employees will be undertaken and where practical, and at
management's discretion, employees will be incorporated into the
enlarged Sandstorm team. To the extent this is not possible, this
may result in redundancies for those employees not incorporated
into the Combined Group. Sandstorm confirms that, following
implementation of the Combination, the existing contractual and
statutory employment rights of all Mariana employees will be
safeguarded.
On completion of the Combination, Nolan Watson
will be the President and Chief Executive Officer of the Combined
Group and Glen Parsons will be manager of the Exploration
Properties. The Mariana Directors have agreed to resign from the
Mariana Board subject to, and with effect from, the Scheme becoming
Effective. The Mariana Directors will each receive accrued fees,
payment for notice periods and expenses due under their respective
letters of appointment, in each case in compensation for loss of
office.
In order to drive value from the Combination,
Sandstorm has agreed to the following retention arrangements in
respect of each of Glen Parsons and Eric Roth (the "Retention
Arrangements"):
- Glen Parsons will, upon the Effective Date, receive an
immediate payment of US$750,000 in return for agreeing to remain
with the Combined Group on a full-time basis for at least 12
months, plus:
- a bonus payment of US$375,000 to be made upon the successful
completion of a sale or spin-out transaction involving the
exploration properties in Argentina; and
- a bonus payment of US$375,000 to be made upon the successful
completion of a sale or spin-out transaction involving the
exploration properties in Côte d'Ivoire,
provided in each case that he is still with the
Combined Group at the relevant time; and
- Eric Roth will, upon the Effective Date, receive an immediate
payment of US$375,000 in return for agreeing to remain with the
Combined Group on a part-time consultancy contract for at least 12
months, plus:
- a bonus payment of US$187,500 to be made upon the successful
completion of a sale or spin-out transaction involving the
exploration properties in Argentina; and
- a bonus payment of US$187,500 to be made upon the successful
completion of a sale or spin-out transaction involving the
exploration properties in Côte d'Ivoire,
provided in each case that he is still with the
Combined Group at the relevant time.
The Combination is subject to, among other
things, the approval by the independent Mariana Shareholders of the
Retention Arrangements. RFC Ambrian consider the Retention
Arrangements to be fair and reasonable as far as the independent
Mariana Shareholders are concerned.
Sandstorm considers the Retention
Arrangements to be critical to the success of the Combination and,
therefore, if the independent Mariana Shareholders do not pass the
relevant resolution at the General Meeting approving those
arrangements, Sandstorm may (at its absolute discretion) seek to
invoke Condition A6 (which appears in Appendix 1 to this
Announcement), which, with the consent of the Panel, would result
in the Combination being withdrawn.
Other than as set out elsewhere in this
Announcement, Sandstorm has no current plans to change the
locations of Mariana's places of business or to redeploy any of
Mariana's fixed assets.
11
Mariana Employee Equity Plans
Participants in the Mariana Employee Equity
Plans will be contacted separately regarding the effect of the
Combination on their rights (if any) and appropriate proposals will
be made to such participants in due course. Further details of
these proposals will be set out in the Scheme Document and in
separate letters to be sent to participants in the Mariana Employee
Equity Plans.
The right to vote in respect of the Scheme will
extend to any Mariana Shares which are unconditionally issued
before the Scheme Voting Record Time as a result of the exercise of
any outstanding rights under the Mariana Employee Equity Plans.
12
Mariana Warrants
The right to vote in respect of the Scheme (and
the entitlement to receive the Consideration under the Scheme) will
extend to any Mariana Shares which are unconditionally issued
before the Scheme Voting Record Time as a result of the valid
exercise of any existing Mariana Warrants.
If Mariana Warrant Holders validly exercise
their subscription rights before the Scheme Record Time, they will
be treated as Scheme Shareholders and receive cash and shares under
the terms of the Scheme.
Mariana will seek shareholder approval at the
General Meeting for amendments to the Articles so that if holders
of Mariana Warrants exercise their subscription rights after the
Scheme Record Time, the Mariana Shares that would have been issued
to them will automatically be acquired by Sandstorm and, in return,
they would receive Sandstorm Shares, the number of which will be
determined based on the relative values of the Consideration and
the Sandstorm Shares as at the date of this Announcement, as set
out in paragraph 2 (The Combination) of this Announcement.
Holders of 2015 Warrants are reminded that the
subscription period under the 2015 Warrants expires at 5pm UK time
on 27 April 2017 and the 2015 Warrants will be incapable of
exercise after that date. The subscription period under the 2016
Warrants expires on 4 May 2018.
Mariana Warrant Holders will be contacted
separately regarding the effect of the Combination on their rights
under the Mariana Warrant Instruments. Further details will be set
out in the Scheme Document. Mariana Warrant Holders needing advice
should consult an independent financial adviser and/or independent
legal adviser.
The Mariana Independent Directors each hold 2015
Warrants over a combined total of 81,000 Mariana Shares. The
Mariana Independent Directors intend to exercise such 2015 Warrants
in full ahead of the expiry of the subscription period on 27 April
2017.
13
Dividends and Sandstorm Dividend Policy
To date, no dividends have been paid by
Sandstorm on Sandstorm Shares and Sandstorm may not declare or pay
any cash dividends in the foreseeable future. Payment of any future
dividends will be at the discretion of Sandstorm's Board of
Directors after taking into account many factors including
Sandstorm's operating results, financial condition and current and
anticipated cash needs.
14
Disclosure of interests in Mariana relevant securities
Sandstorm holds 8,980,243 Mariana Shares,
representing approximately 7.0 per cent. of the issued ordinary
share capital of Mariana, and 2016 Warrants over a further
4,490,122 Mariana Shares. The strike price of the 2016 Warrants
held by Sandstorm is 25 pence and the subscription period expires
on 6 May 2018.
David De Witt (Non-Executive Chairman of
Sandstorm), together with his spouse, holds 297,585 Mariana Shares,
representing approximately 0.2 per cent. of the issued ordinary
share capital of Mariana, and 2016 Warrants over a further 475,893
Mariana Shares.
Family members of Nolan Watson (President and
Chief Executive of Sandstorm) collectively hold 611,578 Mariana
Shares, representing approximately 0.5 per cent. of the issued
ordinary share capital of Mariana, and 2016 Warrants over a further
713,839 Mariana Shares. Dana Watson has undertaken to donate to
charity an amount equivalent to the difference in the value of her
Mariana Shares and 2016 Warrants before and after this
Announcement, to be calculated by reference to the closing prices
per Mariana Share on AIM on 25 April 2017 (being the last Business
Day before the date of this Announcement) and on the date of this
Announcement.
Mary Little (Independent Director of Sandstorm)
holds 500 Mariana Shares, representing approximately 0.0004 per
cent. of the issued ordinary share capital of Mariana.
Sandstorm, together with its concert parties, is
therefore interested in an aggregate of 9,889,906 Mariana Shares,
representing approximately 7.71 per cent. of the issued ordinary
share capital of Mariana and 2016 Warrants over a further 5,679,854
Mariana Shares.
Save for those interests, neither Sandstorm, its
concert parties nor, so far as Sandstorm or its directors are
aware, any other person acting in concert with Sandstorm, has any
interest in or right to subscribe for Mariana relevant
securities.
15
Structure of the Combination
15.1 Terms
and conditions
Appendix 1 to this Announcement sets out the
Conditions and further terms to which the Combination will be
subject, including details of requisite regulatory approvals.
15.2 Scheme
of Arrangement
It is intended that the Combination will be
implemented by way of a court-sanctioned scheme of arrangement
between Mariana and the Scheme Shareholders under Part VIII of the
Companies (Guernsey) Law (although Sandstorm reserves the right to
elect to implement the Combination by way of an Offer, subject to
Panel consent and to the terms of the Co-operation Agreement). The
procedure involves an application by Mariana to the Guernsey Court
to convene the Guernsey Court Meeting to approve the Scheme and
upon approval an application to the Guernsey Court to sanction the
Scheme and to confirm the transfer of all the Scheme Shares to
Sandstorm, in consideration for which Scheme Shareholders who are
on the register of members of Mariana at the Scheme Record Time
will receive the Consideration (on the basis described in paragraph
2 above). For the purposes of qualifying for the exemption from the
registration requirements of the US Securities Act afforded by
Section 3(a)(10), Mariana will inform the Guernsey Court prior to
the Scheme Court Hearing that its sanctioning of the Scheme will be
relied upon by Sandstorm as an approval of the Scheme following a
hearing on its substantive and procedural fairness to Mariana
Shareholders with respect to the issuance of New Sandstorm Shares
to US Holders.
To become Effective, the Scheme requires, among
other things, the approval of a majority in number of the Scheme
Shareholders present and voting in person or by proxy at the
Guernsey Court Meeting, representing not less than 75 per cent. in
value of the Scheme Shares held by such Scheme Shareholders,
together with the sanction of the Guernsey Court and the passing of
any additional resolutions necessary to implement the Scheme at the
General Meeting. In addition, the Scheme may require the approval
of a majority of the minority outstanding Mariana Shares as
required under Multilateral Instrument 61-101 - Protection of
Minority Security Holders in Special Transactions. The Scheme will
only become Effective if it is sanctioned by the Guernsey
Court.
The Scheme can only become Effective in
accordance with its terms if all the Conditions have been satisfied
or, where relevant, waived. Upon the Scheme becoming Effective, it
will be binding on Mariana and all Scheme Shareholders irrespective
of whether or not they attended or voted at the Guernsey Court
Meeting or the General Meeting.
The Combination will be conditional upon the
Scheme becoming unconditional and becoming effective, subject to
the provisions of the Code, by no later than the Long Stop Date or
such later date (if any) as Sandstorm and Mariana may, with the
consent of the Panel, agree and (if required) the Guernsey Court
may allow.
15.3
Publication of the Scheme Document
It is expected that the Scheme Document will be
sent to Mariana Shareholders as soon as practicable and, in any
event, within 28 days of this Announcement (unless the Panel agrees
otherwise).
15.4
Delisting and Cancellation of Trading
It is intended that dealings in Mariana Shares
will be suspended at 5.00 p.m. London time on the Business Day
prior to the Effective Date. It is further intended that
applications will be made to (i) cancel trading in Mariana Shares
on AIM and (ii) delist the Mariana Shares from the TSXV such
cancellations and delistings in each case to take effect on or as
soon as practicable following the Effective Date.
It is also expected that Mariana will make an
application to certain Canadian securities commissions after the
Effective Date to cease to be a reporting issuer in Canada.
15.5
Indicative Timing
The timing of implementation of the Combination
will be dependent upon a number of factors including availability
of the Guernsey Court and receipt of regulatory approvals. It is
expected that the Scheme Document, containing further information
about the Combination and notices of the Court Meeting and General
Meeting, together with the Forms of Proxy, will be published as
soon as practicable and, in any event, within 28 days of this
Announcement (unless the Panel agrees otherwise). An expected
timetable of principal events will be included in the Scheme
Document.
16
Listing, dealings and settlement
Applications will be made to the TSX and the
NYSE MKT for the New Sandstorm Shares to be listed for trading. The
decision on such listings is at the sole discretion of the TSX and
NYSE MKT respectively. It is expected that such listings will
become effective and that dealings for normal settlement in the New
Sandstorm Shares will commence shortly after the Scheme becomes
Effective.
17
Overseas shareholders
The availability of New Sandstorm Shares under
the Combination, and the distribution of this Announcement to
persons who are not resident in the UK may be affected by the laws
of the relevant jurisdiction in which they are located. Such
persons should inform themselves of, and observe any applicable
legal or regulatory requirements of, their jurisdiction. Mariana
Shareholders who are in doubt regarding such matters should consult
an appropriate independent professional adviser in the relevant
jurisdiction without delay.
None of the securities to be issued pursuant to
the Scheme have been or will be registered under the US Securities
Act or the securities laws of any state, district or other
jurisdiction of the United States, and it is currently intended
that the New Sandstorm Shares will be issued to US Holders pursuant
to the exemption from registration under the US Securities Act of
1933, as amended, provided by Section 3(a)(10) under such Act.
This Announcement does not constitute an
offer for sale of any securities or an offer or an invitation to
purchase any securities. Mariana Shareholders are advised to read
carefully the Scheme Document and related Forms of Proxy once these
have been dispatched.
18
Offer-related Arrangements
18.1
Co-operation Agreement
Mariana and Sandstorm have entered into the
Co-operation Agreement dated 26 April 2017, pursuant to which
Mariana and Sandstorm have agreed to undertake to work
co-operatively with each other in order to procure the obtaining of
any and all approvals, consents, clearances, permissions and
waivers as may be necessary, and the making of all filings as may
be necessary, from or under the law, regulations or practices
applied by any regulatory authority in connection with the
satisfaction of the conditions to the Combination as soon as
practicable and to provide each other with such information and
assistance as is reasonably necessary for that purpose.
The Co-operation Agreement also contains
provisions in relation to the Mariana Employee Equity Plans.
Further details of these arrangements will be set out in the Scheme
Document.
18.2
Confidentiality Agreement
On 28 March 2017, Sandstorm and Mariana entered
into a confidentiality agreement in relation to the Combination,
pursuant to which, amongst other things, Sandstorm undertook,
subject to certain exceptions, to keep information relating to
Mariana confidential and not to disclose it to third parties.
19
Documents published on a website
Copies of the following documents will, by no
later than 12.00 p.m. (London time) on the Business Day following
the date of this Announcement, be published on Sandstorm's website
at http://www.sandstormgold.com and Mariana's website at
http://www.marianaresources.com, and will also be available under
Mariana's profile on SEDAR at www.sedar.com, and will be made
available until the end of the Offer Period:
· a
copy of this Announcement;
· the
irrevocable undertakings referred to in paragraph 6 and set out in
Appendix 3 to this Announcement;
· the
Co-operation Agreement;
· the
Confidentiality Agreement;
· the
KPMG consent letter in relation to this Announcement dated 26 April
2017;
· the
RFC Ambrian consent letter in relation to this Announcement dated
26 April 2017; and
· the
Raymond James consent letter in relation to this Announcement dated
25 April 2017.
20
General
Your attention is drawn to the further
information contained in the Appendices which form part of, and
should be read in conjunction with, this Announcement.
KPMG has given and has not withdrawn its written
consent to the issue of this Announcement with the inclusion of the
references to its name in the form and context in which they
appear.
RFC Ambrian has given and has not withdrawn its
written consent to the issue of this Announcement with the
inclusion of the references to its name in the form and context in
which they appear.
Raymond James has given and has not withdrawn
its written consent to the issue of this Announcement with the
inclusion of the references to its name in the form and context in
which they appear.
The Combination will be subject to the
Conditions and certain further terms set out in Appendix 1 and the
further terms and conditions set out in the Scheme Document when
issued. Appendix 2 contains the sources and bases of certain
information contained in this Announcement. Appendix 3 contains
details of the irrevocable undertakings received by Sandstorm.
Appendix 4 contains details of the Sandstorm Forecast. Appendix 5
contains the definitions of certain terms used in this
Announcement.
Enquiries
|
SandstormNolan Watson, President & CEO Adam Spencer,
Senior Vice President, Corporate DevelopmentDenver Harris, Investor
Relations |
+1 604 689 0234+1 416 238 1152+1 604 628 1178 |
| KPMG
LLP (Financial Adviser to Sandstorm)Helen RoxburghMichael
Nicholson |
+44 (0)
207 311 1000 |
|
|
|
|
Mariana John Horsburgh, Independent Chairman and
Non-Executive DirectorGlen Parsons, CEOKaren Davies, Head of
Investor Relations |
+61 2
8437 4588 |
| RFC
Ambrian Limited (Financial Adviser to Mariana)Stephen
AllenBhavesh Patel |
+44 (0)
20 3440 6800 |
|
Raymond James Ltd. (Canadian Financial Adviser to
Mariana)John WilletCraig McDougal |
+1 416
777 7000 |
|
Blytheweigh (PR Adviser to Mariana)Tim BlytheCamilla
HorsfallMegan Ray |
+44 (0)
207 138 3224 |
KPMG LLP, which is authorised and regulated in
the UK by the FCA, is acting exclusively as financial adviser to
Sandstorm in relation to the Combination, and is not acting for any
other person in relation to such Combination. KPMG LLP will
not be responsible to anyone other than Sandstorm for providing the
protections afforded to its clients nor for providing advice in
relation to the Combination or any other matters referred to in
this Announcement or otherwise.
RFC Ambrian Limited, which is authorised and
regulated by the FCA, is acting exclusively for Mariana and noone
else in connection with the Combination and will not be responsible
to anyone other than Mariana for providing the protections afforded
to clients of RFC Ambrian Limited nor for providing advice in
relation to the Combination or any other matters referred to in
this Announcement.
Raymond James Ltd. is acting exclusively as
Canadian financial adviser to Mariana and to the Mariana
Independent Directors, and no-one else in connection with the
Combination and will not be responsible to anyone other than
Mariana for providing the protections afforded to clients of
Raymond James Ltd. nor for providing advice in relation to the
Combination or any other matters referred to in this
Announcement.
The technical and scientific information
relating to Mariana and its assets contained in this Announcement
has been reviewed and approved for release by Eric Roth, Mariana's
Qualified Person as defined by NI 43-101. Mr Roth is Mariana's
Chief Operating Officer and Executive Director and holds a Ph.D. in
Economic Geology from the University of Western Australia, is a
Fellow of the Australian Institute of Mining and Metallurgy
(AusIMM), and is a Fellow of the Society of Economic Geologists
(SEG). Mr Roth has 25 years of experience in international
minerals exploration and mining project evaluation.
IMPORTANT NOTICE
Further information
This Announcement is not intended to and does
not constitute, or form part of, an offer, invitation or the
solicitation of an offer to purchase, otherwise acquire, subscribe
for, sell or otherwise dispose of any securities, or the
solicitation of any vote or approval in any jurisdiction, pursuant
to the Combination or otherwise, nor shall there be any sale,
issuance or transfer of securities of Mariana in any jurisdiction
in contravention of applicable law. The Combination will be made
solely by means of the Scheme Document, which will contain the full
terms and conditions of the Combination including details of how to
vote in respect of the Scheme. Any vote in respect of the Scheme or
other response in relation to the Combination should be made only
on the basis of the information contained in the Scheme
Document.
Overseas jurisdictions
The availability of the Combination to Mariana
Shareholders who are not resident in and citizens of the UK or
Guernsey may be affected by the laws of the relevant jurisdictions
in which they are located or of which they are citizens. Persons
who are not resident in the UK or Guernsey should inform themselves
of, and observe, any applicable legal or regulatory requirements of
their jurisdictions. Relevant clearances have not been, and will
not be, obtained from the securities commission or similar
regulatory authority of any province or territory of Canada.
Further details in relation to overseas shareholders will be
contained in the Scheme Document and Mariana Shareholders are
advised to read carefully the Scheme Document and related Forms of
Proxy once these have been dispatched.
The release, publication or distribution of this
Announcement in or into jurisdictions other than the UK or Guernsey
may be restricted by law and therefore any persons who are subject
to the law of any jurisdiction other than the UK or Guernsey should
inform themselves about, and observe, any applicable requirements.
Any failure to comply with the applicable restrictions may
constitute a violation of the securities laws of any such
jurisdiction. To the fullest extent permitted by applicable law,
the companies and persons involved in the Combination disclaim any
responsibility or liability for the violation of such restrictions
by any person. This Announcement has been prepared for the purposes
of complying with English law, Guernsey law, certain applicable
Canadian securities laws, the AIM Rules, the rules of the London
Stock Exchange and the Code and the information disclosed may not
be the same as that which would have been disclosed if this
Announcement had been prepared in accordance with the laws of
jurisdictions outside of England or Guernsey.
Copies of this Announcement and the formal
documentation relating to the Scheme and the Combination will not
be, and must not be, mailed or otherwise forwarded, distributed or
sent in, into or from any Restricted Jurisdiction or any
jurisdiction where to do so would violate the laws of that
jurisdiction.
Notice to US Holders, US Optionholders
and US Warrantholders
The Combination and the securities to be
issued in connection with the Combination have not been approved or
disapproved by the SEC or the securities regulatory authority of
any state of the United States, nor has the SEC or any such state
securities regulatory authority passed upon the fairness or merits
of the Combination or upon the accuracy or adequacy of this
Announcement. Any representation to the contrary is a criminal
offence.
The New Sandstorm Shares to be received by
Mariana Shareholders in exchange for their Mariana Shares pursuant
to the Combination have not been, and will not be, registered under
the US Securities Act or the securities laws of any state, district
or other jurisdiction of the United States, and such securities are
intended to be issued in reliance upon the exemption from the
registration requirements of the US Securities Act set forth in
Section 3(a)(10) thereof on the basis of the approval of the
Guernsey Court, which will be informed in advance of the intention
to rely upon such exemption, and similar exemptions under
applicable state securities laws. Section 3(a)(10) of the US
Securities Act exempts the issuance of securities issued in
exchange for one or more bona fide outstanding securities, from the
registration requirements of the US Securities Act where, among
other matters, the terms and conditions of such issuance and
exchange have been approved by a court of competent jurisdiction
that is expressly authorized by law to grant such approval, after a
hearing upon the fairness of the substantive and procedural terms
and conditions of such issuance and exchange at which all persons
to whom the securities will be issued have the right to appear and
receive timely and adequate notice thereof.
The New Sandstorm Shares to be received by
Mariana Shareholders upon completion of the Combination may be
resold without restriction under the US Securities Act, except in
respect of resales by persons who are "affiliates" (within the
meaning of Rule 144 under the US Securities Act) of Sandstorm at
the time of the Section 3(a)(10) exchange or who have been
affiliates of Sandstorm within 90 days before the Section 3(a)(10)
exchange or who are affiliates of Sandstorm at the time of such
resale or within the 90-day period prior to such resale. Persons
who may be deemed to be "affiliates" of an issuer include
individuals or entities that control, are controlled by, or are
under common control with, the issuer, whether through the
ownership of voting securities, by contract, or otherwise, and
generally include executive officers and directors of the issuer as
well as principal shareholders of the issuer (which includes, among
others, 10% shareholders).
Mariana Options and Mariana Warrants will remain
outstanding under their terms and any securities issuable upon
exercise thereof have not been and will not be registered under the
U.S. Securities Act or applicable state securities laws. As a
result, Mariana Options and Mariana Warrants may not be exercised
in the United States or by or on behalf of a US Optionholder or US
Warrantholder, as applicable, nor may any New Sandstorm Shares
issued upon such exercise be offered or resold in the United States
or to or for the account of such a US holder, except pursuant to
the terms of such security and pursuant to a registration statement
under the U.S. Securities Act or an exemption from applicable
registration requirements or in a transaction not subject to the
registration requirements of the U.S. Securities Act and applicable
state securities laws.
The financial information on Sandstorm in this
Announcement has been extracted or derived (without material
adjustment) from Sandstorm's Annual Report and Accounts for the
year ended 31 December 2016 and the unaudited interim production
results for the three-month period ending 31 March 2017, which are
prepared in US Dollars. The financial information on Mariana in
this Announcement has been extracted or derived (without material
adjustment) from Mariana's Annual Report and Accounts for the year
ended 31 December 2016, which are prepared in British Pounds
Sterling. In addition, such financial statements and other
financial information included or incorporated by reference in this
Announcement have been prepared in accordance with IFRS, which
differs from US GAAP in certain material respects, and thus are not
directly comparable to financial statements prepared in accordance
with US GAAP.
Information in this Announcement or in the
documents incorporated by reference herein concerning the
properties and operations of Sandstorm and of Mariana has been
prepared in accordance with requirements and standards under
securities laws, which differ from the requirements of US
securities laws. The terms "mineral resource", "measured mineral
resource", "indicated mineral resource" and "inferred mineral
resource" used in the Announcement or in the documents incorporated
by reference herein are mining terms as defined in accordance with
NI 43-101 under guidelines set out in the Definition Standards for
Mineral Resources and Mineral Reserves adopted by the Canadian
Institute of Mining, Metallurgy and Petroleum Council on 11
December 2005. While the terms "mineral resource", "measured
mineral resource", "indicated mineral resource" and "inferred
mineral resource" are recognized and required by securities laws
other than the requirements of US securities laws, they are not
recognized by the SEC. Disclosure of contained ounces are or may be
permitted disclosure under regulations applicable to Mariana and
Sandstorm; however, the SEC normally only permits issuers to report
resources as in place tonnage and grade without reference to unit
of production measures. As such, certain information contained in
the Announcement or in the documents incorporated by reference
herein concerning descriptions of mineralization and mineral
resources under these standards may not be comparable to similar
information made public by US companies subject to reporting and
disclosure requirements of the SEC.
US Holders should be aware that the Combination
described in the Announcement may have tax consequences in the
United States and should consult their own tax advisors to
determine the particular United States tax consequences to them of
the Combination in light of their particular situation, as well as
any tax consequences that may arise under the laws of any other
relevant foreign, state, local, or other taxing jurisdiction.
The enforcement by investors of civil
liabilities under the United States federal and state securities
laws may be affected adversely by the fact that Sandstorm and
Mariana are incorporated or organized under the laws of a
jurisdiction other than the United States, that some or all of
their officers and directors are and will be residents of countries
other than the United States, that some or all of the experts named
in the Announcement may be residents of countries other than the
United States, and that all or a substantial portion of the assets
of Sandstorm, Mariana and such persons are and will be located
outside the United States. As a result, it may be difficult or
impossible for US Holders (including US Optionholders and US
Warrantholders) to effect service of process within the United
States upon Sandstorm or Mariana, as applicable, their respective
officers or directors or the experts named herein, or to realize,
against them, upon judgments of courts of the United States
predicated upon civil liabilities under the federal securities laws
of the United States or applicable securities laws of any state
within the United States. In addition, US Holders (including US
Optionholders and US Warrantholders) should not assume that the
courts of Guernsey: (a) would enforce judgments of United States
courts obtained in actions against such persons predicated upon
civil liabilities under the federal securities laws of the United
States or applicable securities laws of any state within the United
States; or (b) would enforce, in original actions, liabilities
against such persons predicated upon civil liabilities under the
federal securities laws of the United States or applicable
securities laws of any state within the United States.
Notice to Canadian Holders
The enforcement by investors of civil
liabilities under the Canadian securities laws may be affected
adversely by the fact that Mariana is incorporated or organized
under the laws of a jurisdiction other than Canada, that some or
all of Sandstorm's and Mariana's officers and directors are and
will be residents of countries other than Canada, that some or all
of the experts named in this Announcement may be residents of
countries other than Canada, and that all or a substantial portion
of the assets of Sandstorm, Mariana and such persons are and will
be located outside Canada. As a result, it may be difficult or
impossible for Canadian Holders to effect service of process within
Canada upon Mariana, Sandstorm's and Mariana's respective officers
or directors or the experts named herein, or to realize, against
them, upon judgments of courts of Canada predicated upon
liabilities under Canadian securities laws. In addition, Canadian
Holders should not assume that the courts of Guernsey: (a) would
enforce judgments of Canadian courts obtained in actions against
such persons predicated upon civil liabilities under Canadian
securities laws; or (b) would enforce, in original actions,
liabilities against such persons predicated upon civil liabilities
under the Canadian securities laws.
The New Sandstorm Shares to be issued pursuant
to the Combination will be issued in reliance upon exemptions from
the prospectus requirements of securities legislation in each
province of Canada. Subject to certain disclosure and regulatory
requirements and to customary restrictions applicable to
distributions of shares that constitute "control distributions",
New Sandstorm Shares may be resold in each province and territory
in Canada, subject in certain circumstances, to the usual
conditions that no unusual effort has been made to prepare the
market or to create demand, no extraordinary commission or
consideration is paid and, if the selling shareholder is an insider
or officer of Sandstorm, such shareholder has no reasonable grounds
to believe that Sandstorm is in default of securities
legislation.
Canadian Holders should be aware that the
Combination described in this Announcement may have tax
consequences in Canada and should consult their own tax advisors to
determine the particular Canadian tax consequences to them of the
Combination in light of their particular circumstances, as well as
any tax consequences that may arise under the laws of any other
relevant foreign, state, local, or other taxing jurisdiction.
Forward-looking statements
This Announcement (including information
incorporated by reference in this Announcement), oral statements
made regarding the Combination, and other information published by
Sandstorm and Mariana contain statements which are, or may be
deemed to be, "forwardlooking statements" or "forward-looking
information" under applicable securities laws (collectively
referred to as "forward-looking statements").
Forwardlooking statements are prospective in nature and are not
based on historical facts, but rather on current expectations and
projections of the management of Sandstorm and Mariana about future
events, and are therefore subject to risks and uncertainties which
could cause actual results to differ materially from the future
results expressed or implied by the forwardlooking statements.
The forwardlooking statements contained in this
Announcement include statements relating to the expected effects of
the Combination on Sandstorm and Mariana, the expected timing and
scope of the Combination, production forecasts, plans with respect
to the JV interest, plans with respect to the Exploration
Properties, estimates of mineral resources, statements with respect
to the Hot Maden PEA and other statements other than historical
facts. Often, but not always, forwardlooking statements can be
identified by the use of forwardlooking words such as "plans",
"expects" or "does not expect", "is expected", "is subject to",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases or statements that certain
actions, events or results "may", "could", "should", "would",
"might" or "will" be taken, occur or be achieved. Although
Sandstorm and Mariana believe that the expectations reflected in
such forwardlooking statements are reasonable, Sandstorm and
Mariana can give no assurance that such expectations will prove to
be correct. By their nature, forwardlooking statements involve
risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. There are a number of
factors that could cause actual results and developments to differ
materially from those expressed or implied by such forwardlooking
statements.
These factors include, but are not limited to:
the ability to consummate the Combination; the ability to obtain
requisite shareholder and stock exchange approvals and the
satisfaction of other Conditions on the proposed terms and
schedule; the ability of Sandstorm and Mariana to successfully
integrate their respective operations and retain key employees; the
potential impact of the announcement or consummation of the
Combination on relationships, including with employees, suppliers,
customers and competitors; and changes in general economic,
business and political conditions. Other unknown or unpredictable
factors could cause actual results to differ materially from those
in the forwardlooking statements. Such forwardlooking statements
should therefore be construed in the light of such factors. Neither
Sandstorm nor Mariana, nor any of their respective associates or
directors, officers or advisers, provides any representation,
assurance or guarantee that the occurrence of the events expressed
or implied in any forwardlooking statements in this Announcement
will actually occur. You are cautioned not to place undue reliance
on these forwardlooking statements. Other than in accordance with
their legal or regulatory obligations (including, but not limited
to, the AIM Rules), neither Sandstorm nor Mariana is under any
obligation, and Sandstorm and Mariana expressly disclaim any
intention or obligation, to update or revise any forwardlooking
statements, whether as a result of new information, future events
or otherwise.
With respect to statements on the Sandstorm
Forecast, which is included for the purposes outlined herein,
readers are cautioned that the information may not be appropriate
for other purposes.
No profit forecasts or estimates or
quantified financial benefits statement
Other than in respect of the Sandstorm Forecast,
no statement in this Announcement is intended as a profit forecast,
profit estimate or quantified financial benefits statement and no
statement in this Announcement should be interpreted to mean that
earnings per Mariana Share or Sandstorm Share for the current or
future financial years would necessarily match or exceed the
respective historical published earnings per Mariana Share or
Sandstorm Share or to mean that the Combined Group's earnings in
the first twelve months following the Combination, or in any
subsequent period, following the Combination would necessarily
match, or be greater than or be less than, those of Mariana and/or
Sandstorm for the relevant preceding financial period or any other
period.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is
interested in 1% or more of any class of relevant securities of an
offeree company or of any securities exchange offeror (being any
offeror other than an offeror in respect of which it has been
announced that its offer is, or is likely to be, solely in cash)
must make an Opening Position Disclosure following the commencement
of the offer period and, if later, following the announcement in
which any securities exchange offeror is first identified. An
Opening Position Disclosure must contain details of the person's
interests and short positions in, and rights to subscribe for, any
relevant securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who
is, or becomes, interested in 1% or more of any class of relevant
securities of the offeree company or of any securities exchange
offeror must make a Dealing Disclosure if the person deals in any
relevant securities of the offeree company or of any securities
exchange offeror. A Dealing Disclosure must contain details of the
dealing concerned and of the person's interests and short positions
in, and rights to subscribe for, any relevant securities of each of
(i) the offeree company and (ii) any securities exchange
offeror(s), save to the extent that these details have previously
been disclosed under Rule 8. A Dealing Disclosure by a person to
whom Rule 8.3(b) applies must be made by no later than 3.30 pm
(London time) on the business day following the date of the
relevant dealing.
If two or more persons act together pursuant to
an agreement or understanding, whether formal or informal, to
acquire or control an interest in relevant securities of an offeree
company or a securities exchange offeror, they will be deemed to be
a single person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made
by the offeree company and by any offeror and Dealing Disclosures
must also be made by the offeree company, by any offeror and by any
persons acting in concert with any of them (see Rules 8.1, 8.2 and
8.4). Details of the offeree and offeror companies in respect of
whose relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on website and SEDAR
A copy of this Announcement will be made
available, subject to certain restrictions relating to persons
resident in Restricted Jurisdictions, on Sandstorm's website at
http://www.sandstormgold.com and Mariana's website at
http://www.marianaresources.com by no later than 12 noon (London
time) on the Business Day following this Announcement. For the
avoidance of doubt, the contents of these websites are not
incorporated by reference and do not form part of this
Announcement.
This Announcement will also be available on
SEDAR under Mariana's profile at www.sedar.com.
Requesting hard copy documents
In accordance with Rule 30.3 of the Code, a
person so entitled may request a hard copy of this Announcement by
contacting RFC Ambrian Limited during business hours on +44 (0)203
440 6800 or by submitting a request in writing to RFC Ambrian
Limited at Level 5, Condor House, 10 St Paul's Churchyard, London,
EC4M 8AL. For persons who receive a copy of this Announcement in
electronic form or via a website notification, a hard copy of this
Announcement will not be sent unless so requested. You may also
request that all future documents, announcements and information to
be sent to you in relation to the Combination should be in hard
copy form.
Electronic Communications
Please be aware that addresses, electronic
addresses and certain other information provided by Mariana
Shareholders, persons with information rights and other relevant
persons for the receipt of communications from Mariana may be
provided to Sandstorm during the offer period as required under
Section 4 of Appendix 4 of the Code to comply with Rule
2.11(c).
Rule 2.9 Disclosure
In accordance with Rule 2.9 of the Code:
· Mariana
confirms that as at the date of this Announcement it has in issue
and admitted to trading on AIM and TSXV 126,231,768 ordinary shares
of 0.1p each (save for 1,977,812 Mariana Shares which have been
issued and are expected to be admitted to trading on AIM and TSXV
on or around 27 April 2017). The ISIN of the ordinary shares is
GG00BD3GC324.
· Sandstorm
confirms that as at the date of this Announcement it has in issue
and admitted to trading on TSX and NYSE MKT 151,994,269 common
shares of no par value. The ISIN of the common shares is
CA80013R2063.
· Sandstorm
confirms that as at the date of this Announcement it has in issue
and admitted to trading on TSX 5,002,500 common share purchase
warrants with an exercise price of US$14.00 per common share that
expire on 7 September 2017. The ISIN of the warrants is
CA80013R1313.
· Sandstorm
confirms that as at the date of this Announcement it has in issue
and admitted to trading on TSX 5,043,900 common share purchase
warrants with an exercise price of US$4.00 per common share that
expire on 3 November 2020. The ISIN of the warrants is
CA80013R1644.
Rounding
Certain figures included in this Announcement
have been subjected to rounding adjustments. Accordingly, figures
shown for the same category presented in different tables may vary
slightly and figures shown as totals in certain tables may not be
an arithmetic aggregation of figures that precede them.
Appendix 1 Conditions and Certain
Further Terms of the Scheme and the Combination
A. Conditions of the Combination
The Combination will be conditional upon the
Scheme becoming unconditional and becoming Effective, subject to
the provisions of the Code, by no later than the Long Stop Date or
such later date (if any) as Sandstorm and Mariana may, with the
consent of the Panel, agree and (if required) the Guernsey Court
may allow.
Scheme Approval
1 The
Scheme will be conditional upon:
(a)
approval of the Scheme by a majority in number representing not
less than 75 per cent. in value of the Scheme Shareholders (or the
relevant class or classes thereof, if applicable) present and
voting, either in person or by proxy, at the Guernsey Court Meeting
and at any separate class meeting which may be required by the
Guernsey Court or at any adjournment of any such meeting not later
than the 22nd day after the date for which the Guernsey Court
Meeting is originally convened (or such later date, if any, as
Sandstorm and Mariana may agree and the Guernsey Court may
allow);
(b)
all resolutions necessary to approve and implement the Scheme and
to approve certain related matters being duly passed by the
requisite majority or majorities at the General Meeting or at any
adjournment of that meeting not later than the 22nd day after the
date for which the General Meeting is originally convened (or such
later date, if any, as Sandstorm and Mariana may agree and the
Guernsey Court may allow); and
(c)
the sanction of the Scheme with or without modification (but
subject to any such modification being acceptable to Sandstorm and
Mariana) by the Guernsey Court and the Guernsey Court Meeting to
sanction the Scheme being held on or before the 22nd day after the
expected date of the Guernsey Court sanction hearing as set out in
the Scheme Document (or such later date as Sandstorm and Mariana
may agree and the Guernsey Court may allow).
In addition, Sandstorm and Mariana have agreed
that, subject as stated in Part B below, the Combination will be
conditional upon the following matters and, accordingly, the
necessary actions to make the Scheme Effective will not be taken
unless such conditions (as amended, if appropriate) have been
satisfied or, where relevant, waived:
Regulatory clearances
2 The
Government of the Republic of Côte d'Ivoire, acting through its
relevant department or agency, either confirming, on terms
reasonably satisfactory to Sandstorm, that no regulatory consents
are required for the indirect change of control of Awalé Resources
SARL and/or Srika Gold or, if any such consents are required, the
Government of the Republic of Côte d'Ivoire, acting through its
relevant department or agency, giving the relevant consents on
terms reasonably satisfactory to Sandstorm.
Listing of New Sandstorm Shares
3
Conditional approval or approval being granted for the New
Sandstorm Shares to be listed and posted for trading on the TSX and
the NYSE MKT.
General third party clearances
4
Excluding any filings required for the purposes of the confirmation
or consent referred to in paragraph 2 (to which only paragraph 2
shall apply), all necessary filings or applications, including
stock exchange applications, having been made, all necessary
waiting and other time periods (including any extensions of such
waiting and other time periods) under any applicable legislation or
regulation of any relevant jurisdiction having expired, lapsed or
been terminated (as appropriate) and all statutory or regulatory
obligations in any relevant jurisdiction deemed required having
been complied with, in each case in connection with the Combination
or the acquisition by any member of the Wider Sandstorm Group of
any shares or other securities in, or control of, any member of the
Wider Mariana Group, where the direct consequence of a failure to
make such a notification or filing or to wait for the expiry,
lapse, or termination of any such waiting or time period would be
unlawful in any relevant jurisdiction or which is material in the
context of the Wider Sandstorm Group or the Wider Mariana Group, in
each case, taken as a whole, or would be material in the context of
the Combination.
5 All
Authorisations, including stock exchange approvals, which are
necessary or are reasonably considered necessary by Sandstorm in
any relevant jurisdiction for or in respect of the Scheme or
Combination or the acquisition or proposed acquisition of any
shares or other securities in, or control or management of, Mariana
or any other member of the Wider Mariana Group by any member of the
Wider Sandstorm Group or the carrying on by any member of the Wider
Mariana Group of its business having been obtained, in terms and in
a form reasonably satisfactory to Sandstorm, from all appropriate
Third Parties or from any persons or bodies with whom any member of
the Wider Mariana Group has entered into contractual arrangements,
in each case where the absence of such Authorisation would or might
reasonably be expected to have a material adverse effect on the
Mariana Group taken as a whole and all such Authorisations
remaining in full force and effect and there being no notice or
intimation of any intention to revoke, suspend, restrict, modify or
not to renew any of the same.
6 Any
resolution or resolutions of the independent Mariana Shareholders
required to approve and implement the Retention Arrangements being
duly passed at the General Meeting in accordance with Rule 16 of
the Code.
7
Excluding in relation to the confirmation or consent referred to in
paragraph 2 (to which only paragraph 2 shall apply), no Third
Party having intervened (as defined below) and there not continuing
to be outstanding any statute, regulation or order of any Third
Party, in each case which would or might reasonably be expected
to:
(a)
make the Scheme or the Combination or, in each case, its
implementation or the acquisition or proposed acquisition by
Sandstorm or any member of the Wider Sandstorm Group of any shares
or other securities in, or control or management of, Mariana or any
member of the Wider Mariana Group void, illegal or unenforceable in
any jurisdiction, or otherwise directly or indirectly materially
restrain, prevent, prohibit, restrict or materially delay the same
or impose additional conditions or obligations with respect to the
Scheme or the Combination or such acquisition, or otherwise
materially impede, challenge or interfere with the Scheme or
Combination or such acquisition, or require amendment to the terms
of the Scheme or Combination or the acquisition or proposed
acquisition of any Mariana Shares or the acquisition of control or
management of Mariana or the Wider Mariana Group by Sandstorm or
any member of the Wider Sandstorm Group;
(b)
materially limit or delay, or impose any material limitations on,
the ability of any member of the Wider Sandstorm Group or any
member of the Wider Mariana Group to acquire or to hold or to
exercise effectively, directly or indirectly, all or any rights of
ownership in respect of shares or other securities in, or to
exercise voting or management control over, any member of the Wider
Mariana Group or any member of the Wider Sandstorm Group;
(c)
require, prevent or materially delay the divestiture or materially
alter the terms envisaged for any proposed divestiture by any
member of the Wider Sandstorm Group of any shares or other
securities in Mariana or of all or any portion of their respective
businesses, assets or properties or materially limit the ability of
any of them to conduct any of their respective businesses or to own
or control any of their respective assets or properties or any part
thereof;
(d)
require any member of the Wider Sandstorm Group or of the Wider
Mariana Group to acquire, or to offer to acquire, any shares or
other securities (or the equivalent) in any member of either group
owned by any third party;
(e)
materially limit the ability of any member of the Wider Sandstorm
Group or of the Wider Mariana Group to conduct or integrate or
co-ordinate its business, or any part of it, with the businesses or
any part of the businesses of any other member of the Wider
Sandstorm Group or of the Wider Mariana Group; or
(f) otherwise
materially adversely affect any or all of the business, assets,
profits, financial or trading position of any member of the Wider
Mariana Group or of the Wider Sandstorm Group.
Certain matters arising as a result of any
arrangement, agreement, etc.
8
Except as Disclosed, there being no provision of any arrangement,
agreement, licence, permit, franchise or other instrument to which
any member of the Wider Mariana Group is a party, or by or to which
any such member or any of its assets is or are or may be bound,
entitled or subject or any circumstance, which, in each case as a
consequence of the Scheme or Combination or the acquisition or
proposed acquisition of any shares or other securities in, or
control of, Mariana or any other member of the Wider Mariana Group
by any member of the Wider Sandstorm Group or otherwise, would be
expected to result in (in any case to an extent which would
reasonably be expected to be material in the context of the Mariana
Group taken as a whole):
(a)
any monies borrowed by or any other indebtedness or liabilities
(actual or contingent) of, or any grant available to, any member of
the Wider Mariana Group being or becoming repayable or capable of
being declared repayable immediately or prior to its stated
maturity date or repayment date or the ability of any member of the
Wider Mariana Group to borrow monies or incur any indebtedness
being withdrawn or inhibited or becoming capable of being withdrawn
or inhibited;
(b)
the creation or enforcement of any mortgage, charge or other
security interest over the whole or any part of the business,
property, assets or interests of any member of the Wider Mariana
Group or any such mortgage, charge or other security interest
(wherever created, arising or having arisen) becoming
enforceable;
(c)
any such arrangement, agreement, licence, permit, franchise or
instrument, or the rights, liabilities, obligations or interests of
any member of the Wider Mariana Group thereunder, being, or
becoming capable of being, terminated or adversely modified or
affected or any adverse action being taken or any obligation or
liability arising thereunder;
(d)
any asset or interest of any member of the Wider Mariana Group
being or falling to be disposed of or charged or ceasing to be
available to any member of the Wider Mariana Group or any right
arising under which any such asset or interest could be required to
be disposed of or could cease to be available to any member of the
Wider Mariana Group otherwise than in the ordinary course of
business;
(e)
the creation of any liabilities (actual or contingent) by any
member of the Wider Mariana Group other than in the ordinary course
of business;
(f) the rights,
liabilities, obligations or interests of any member of the Wider
Mariana Group under any such arrangement, agreement, licence,
permit, franchise or other instrument or the interests or business
of any such member in or with any other person, firm, company or
body (or any arrangement or arrangements relating to any such
interests or business) being terminated or adversely modified or
affected; or
(g)
the financial or trading position or the value of any member of the
Wider Mariana Group being prejudiced or adversely affected,
and no event having occurred which, under any
provision of any such arrangement, agreement, licence, permit or
other instrument, would or would reasonably be expected to result
in any of the events or circumstances which are referred to in
paragraphs (a) to (g) of this Condition 6 in any case to an
extent which would or might reasonably be expected to be material
in the context of the Mariana Group taken as a whole.
Certain events occurring since 31 December
2016
9
Except as Disclosed, no member of the Wider Mariana Group having,
since 31 December 2016:
(a)
issued or agreed to issue, or authorised the issue of, additional
shares of any class, or securities convertible into or exercisable
or exchangeable for, or rights, warrants or options to subscribe
for or acquire, any such shares or convertible securities or
transferred or sold any shares out of treasury, other than as
between Mariana and wholly-owned subsidiaries of Mariana or any
shares issued or shares transferred from treasury upon the exercise
of any Mariana Warrants or of any Mariana Options;
(b)
purchased or redeemed or repaid any of its own shares or other
securities or reduced or made any other change to any part of its
share capital;
(c)
recommended, declared, paid or made any dividend or other
distribution whether payable in cash or otherwise or made any bonus
issue (other than to Mariana or a wholly-owned subsidiary of
Mariana);
(d)
save for intra-Mariana Group transactions, made or authorised any
change in its loan capital;
(e)
save for intra-Mariana Group transactions, entered into,
implemented or authorised the entry into, any joint venture, asset
or profit sharing arrangement, partnership or merged with, demerged
or acquired any body corporate, partnership or business or acquired
or disposed of or transferred, mortgaged, charged or created any
security interest over any assets or any right, title or interest
in any assets (including shares in any undertaking and trade
investments) or authorised the same (in each case to an extent
which would or might reasonably be expected to be material in the
context of the Mariana Group taken as a whole);
(f) issued or
authorised the issue of, or made any change in or to, any
debentures or (save for intra-Mariana Group transactions) incurred
or increased any indebtedness or liability (actual or contingent)
which in any case would or might reasonably be expected to be
material in the context of the Mariana Group taken as a whole;
(g)
entered into, varied, or authorised any material agreement,
transaction, arrangement or commitment (whether in respect of
capital expenditure or otherwise) which:
(A) is of a
long term, onerous or unusual nature or magnitude or which is
reasonably likely to involve an obligation of such nature or
magnitude; or
(B) is
likely to restrict the business of any member of the Wider Mariana
Group; or
(C) is other
than in the ordinary course of business,
(ii)
and which would or might reasonably be expected to be material in
the context of the Mariana Group taken as a whole;
(h)
undertaken:
(i) a conversion or
transfer under Part V of the Companies (Guernsey) Law;
(ii)
an amalgamation under Part VI of the Companies (Guernsey) Law;
(iii) a
migration under Part VII of the Companies (Guernsey) Law; or
(iv) an
arrangement or reconstruction (other than the Scheme) under Part
VIII of the Companies (Guernsey) Law;
(i) taken any
corporate action or had any legal proceedings instituted or
threatened against it or petition presented or order made for its
winding-up (voluntarily or otherwise), dissolution or
reorganisation or for the appointment of a receiver, administrator,
administrative receiver, trustee or similar officer of all or any
material part of its assets and revenues or any analogous
proceedings in any jurisdiction or appointed any analogous person
in any jurisdiction which in any case would or might reasonably be
expected to be material in the context of the Mariana Group taken
as a whole;
(j) been unable, or
admitted in writing that it is unable, to pay its debts or having
stopped or suspended (or threatened to stop or suspend) payment of
its debts generally or ceased or threatened to cease carrying on
all or a substantial part of its business;
(k)
waived or compromised any claim otherwise than in the ordinary
course of business which would or might reasonably be expected to
be material in the context of the Mariana Group taken as a
whole;
(l) made any
alteration to its memorandum or articles of incorporation (in each
case, other than in connection with the Scheme);
(m) entered
into, terminated or varied the terms of or made any offer (which
remains open for acceptance) to enter into or vary the terms of,
any contract, agreement, commitment, transaction or arrangement
with any person employed by any member of the Wider Mariana Group,
including entering into any such arrangement which would result in
any liability of any member of the Wider Mariana Group to make any
severance, termination, bonus or other payments to any of its
directors or other officers, which would or might reasonably be
expected to be material in the context of the Combination or which
would or might reasonably be expected to have a material adverse
effect on the financial position of the Wider Mariana Group;
(n)
proposed, agreed to provide or modified the terms of any share
option scheme, incentive scheme or other benefit relating to the
employment or termination of employment of any person employed by
the Wider Mariana Group; or
(o)
other than with the consent of Sandstorm, no action having been
taken or proposed by any member of the Wider Mariana Group, or
having been approved by Mariana Shareholders or consented to by the
Panel, which falls or would fall within or under Rule 21.1 of the
Code or which otherwise is or would be materially inconsistent with
the implementation by Sandstorm of the Combination on the basis
contemplated as at the date of this Announcement.
No adverse change, litigation or regulatory
enquiry
10
Except as Disclosed, since 31 December 2016:
(a)
there having been no adverse change or deterioration in the
business, assets, financial or trading positions or profit or
prospects of any member of the Wider Mariana Group which in any
case would or might reasonably be expected to be material in the
context of the Mariana Group taken as a whole;
(b) no
contingent or other liability of any member of the Wider Mariana
Group having arisen or become apparent or increased which in any
case would or might reasonably be expected to be material in the
context of the Mariana Group taken as a whole;
(c) no
litigation, arbitration proceedings, prosecution or other legal or
regulatory proceedings to which any member of the Wider Mariana
Group is or may become a party (whether as plaintiff, defendant or
otherwise) and no investigation by any Third Party against or in
respect of any member of the Wider Mariana Group having been
threatened, announced, implemented or instituted by or against or
remaining outstanding against or in respect of any member of the
Wider Mariana Group which in any such case might reasonably be
expected to have a material adverse effect on the Mariana Group
taken as a whole;
(d) no
steps having been taken which are likely to result in the
withdrawal, cancellation, termination or modification of any
licence held by any member of the Wider Mariana Group which is
necessary for the proper carrying on of its business and the
withdrawal, cancellation, termination or modification of which
might reasonably be expected to have a material adverse effect on
the Wider Mariana Group taken as a whole;
(e)
(other than as a result of the Combination) no enquiry or
investigation by, or complaint or reference to, any Third Party
having been threatened, announced, implemented, instituted by or
against or remaining outstanding against or in respect of any
member of the Wider Mariana Group which in any case would or might
reasonably be expected to be material in the context of the Mariana
Group taken as a whole; and
(f) no member of
the Wider Mariana Group having conducted its business in breach of
any applicable laws and regulations which in any case would or
might reasonably be expected to be material in the context of the
Mariana Group taken as a whole.
No discovery of certain matters
11
Except as Disclosed, Sandstorm not having discovered:
(a)
that any financial or business or other information concerning the
Wider Mariana Group disclosed at any time by or on behalf of any
member of the Wider Mariana Group, whether publicly, to any member
of the Wider Sandstorm Group or to any of their advisers or
otherwise, is misleading or contains any misrepresentation of fact
or omits to state a fact necessary to make any information
contained therein not misleading to an extent which might
reasonably be expected to be material in the context of the Mariana
Group taken as a whole;
(b)
that any member of the Wider Mariana Group is subject to any
liability (actual or contingent) which would or might reasonably be
expected to be material in the context of the Mariana Group taken
as a whole;
(c)
any past or present member of the Wider Mariana Group has not
complied in all material respects with all applicable legislation,
regulations or other requirements of any jurisdiction or any
Authorisations relating to the use, treatment, storage, carriage,
disposal, discharge, spillage, release, leak or emission of any
waste or hazardous substance or any substance likely to impair the
environment (including property) or harm human health or otherwise
relating to environmental matters or the health and safety of any
person, or that there has otherwise been any such use, treatment,
handling, storage, transport, release, disposal, discharge,
spillage, leak or emission (whether or not this constituted a
non-compliance by any person with any legislation or regulations
and wherever the same may have taken place), which non-compliance
would be likely to give rise to any material liability including
any penalty for non-compliance (whether actual or contingent) or
cost on the part of any member of the Wider Mariana Group;
(d)
there is or is likely to be any material liability (actual or
contingent) to make good, repair, reinstate or clean up any
property now or previously owned, occupied or made use of by any
past or present member of the Wider Mariana Group under any
environmental legislation, regulation, notice, circular or order of
any government, governmental, quasi-governmental, state or local
government, supranational, statutory or other regulatory body,
agency, court, association or any other person or body in any
jurisdiction;
(e)
circumstances exist which would be reasonably likely to lead to any
Third Party instituting, or whereby any member of the Wider
Sandstorm Group or any present or past member of the Wider Mariana
Group would be likely to be required to institute, an environmental
audit or take any other steps which would in any such case be
reasonably likely to result in any liability (whether actual or
contingent) to improve, modify existing or install new plant,
machinery or equipment or carry out changes in the processes
currently carried out or make good, remediate, repair, re-instate
or clean up any land or other asset currently or previously owned,
occupied or made use of by any past or present member of the Wider
Mariana Group or by any person for which a member of the Wider
Mariana Group is or has been responsible or in which any such
member may have or previously have had or be deemed to have had any
interest which is material in the context of the Wider Mariana
Group taken as a whole; or
(f) circumstances
exist whereby a person would be likely to have any claim in respect
of any product or process of manufacture or materials used therein
currently or previously manufactured sold or carried out by any
past or present member of the Wider Mariana Group which claim would
be likely, materially and adversely, to affect any member of the
Wider Mariana Group to an extent which is material in the context
of the Wider Mariana Group taken as a whole.
Anti-corruption, sanctions and criminal
property
12
Except as Disclosed, Sandstorm not having discovered that:
(a)
any:
(A) past or
present member, director, officer or employee of the Wider Mariana
Group; or
(B) person
that performs or has performed services on behalf of the Wider
Mariana Group,
has at any time engaged in an activity, practice
or conduct which would constitute an offence under the UK Bribery
Act 2010, the US Foreign Practices Act of 1977, The Corruption of
Foreign Public Officials Act (Canada) 1998, the Prevention of
Corruption (Bailiwick of Guernsey) Law, 2003 of or any other
applicable anti-corruption legislation, including paid or agree to
pay any bribe including any "inducement fee", given or agreed to
give any similar gift or benefit or paid or agreed to pay a
concealed bank account or fund to or for the account of, any
customer, supplier, governmental official or employee,
representative of a political party, or other person for the
purpose of obtaining or retaining business;
(b)
any asset of any member of the Wider Mariana Group constitutes
criminal property as defined by section 340(3) of the Proceeds of
Crime Act 2002 (but disregarding paragraph (b) of that
definition);
(c)
any past or present member, director, officer or employee of the
Wider Mariana Group, or any other person for whom any such person
may be liable or responsible, has engaged in any business or made
any investments in, or made any payments or assets available to or
received any funds or asset from:
(A) any
government, entity, or individual with which US or Canadian or
European Union persons (or persons operating in those territories)
are prohibited from engaging in activities, doing business or from
receiving or making available funds or economic resources, by US,
Canadian or European Union laws or regulations, including the
economic sanctions administered by the United States Office of
Foreign Assets Control or HM Treasury & Customs; or
(B) any
government, entity or individual targeted by any of the economic
sanctions of the United Nations, United States or the European
Union or any of its member states; or
(d) a
member of the Mariana Group has engaged in a transaction which
would cause the Sandstorm Group to be in breach of any law or
regulation on completion of the Combination, including the economic
sanctions administered by the United States Office of Foreign
Assets Control or HM Treasury & Customs, or any government,
entity or individual targeted by any of the economic sanctions of
the United Nations, United States or the European Union or any of
its member states.
13 For
the purpose of these Conditions:
(a)
Authorisations means authorisations, orders, grants,
recognitions, determinations, certificates, confirmations,
consents, licences, clearances, provisions and approvals;
(b)
Third Party means any central bank, government, government
department or governmental, quasi-governmental, supranational,
statutory, regulatory, environmental or investigative body,
authority (including any national or supranational anti-trust or
merger control authority), court, trade agency, stock exchange,
association, institution or professional or environmental body or
any other person or body whatsoever in any relevant jurisdiction,
including, for the avoidance of doubt, the Panel; and
(c) a
Third Party shall be regarded as having "intervened" if it has
given notice to take, institute, implement or threaten any action,
proceeding, suit, investigation, enquiry or reference or made,
proposed or enacted any statute, regulation, decision or order or
taken any measures or other steps or required any action to be
taken or information to be provided or otherwise having done
anything and "intervene" shall be construed accordingly.
B. Certain further terms of the Scheme and
the Combination
1
Conditions 2 to 11 (inclusive) must be fulfilled, be determined by
Sandstorm to be or remain satisfied or (if capable of waiver) be
waived by 11.59 p.m. on the date immediately preceding the date of
the Scheme Court Hearing, failing which the Scheme will lapse.
2
Notwithstanding the paragraph above and subject to the requirements
of the Panel, Sandstorm reserves the right in its sole discretion
to waive all or any of Conditions 2 to 11 inclusive, in whole or in
part and to proceed with the Scheme Court Hearing prior to the
fulfilment, satisfaction or waiver of any of the Conditions 2 to 11
inclusive.
3
Sandstorm shall be under no obligation to waive (if capable of
waiver), to determine to be or remain satisfied or to treat as
fulfilled any of Conditions 2 to 11 (inclusive) by a date earlier
than the latest date specified above for the fulfilment of that
condition, notwithstanding that the other Conditions may at such
earlier date have been waived or fulfilled and that there are, at
such earlier date, no circumstances indicating that any Condition
may not be capable of fulfilment.
4
Fractions of New Sandstorm Shares will not be allotted or issued to
holders of Mariana Shares. Fractional entitlements will be rounded
down to the nearest whole number of New Sandstorm Shares.
Fractional entitlements of pence payable to holders of Mariana
Shares under the Cash Consideration Amount will be rounded down to
the nearest whole number of pence.
5
Sandstorm reserves the right to elect to implement the Combination
by way of a takeover offer in compliance with the Code (which shall
be an offer for the purposes of section 337 of the Companies
(Guernsey) Law), subject to the Panel's consent. In such event,
such Offer will be implemented by Sandstorm or a wholly-owned
subsidiary of Sandstorm on the same terms and conditions (subject
to appropriate amendments, including (without limitation) an
acceptance condition set at 90 per cent. (or such other percentage
(being more than 50 per cent.) as Sandstorm may decide (subject to
the Panel's consent) of the shares to which such Offer relates) so
far as applicable, as those which would apply to the Scheme.
6 If
the Panel requires Sandstorm to make an offer for Mariana Shares
under the provisions of Rule 9 of the Code, Sandstorm may make such
alterations to the Conditions as are necessary to comply with the
provisions of that Rule.
7 The
Combination will be subject, inter alia, to the Conditions and
certain further terms which are set out in this Appendix 1 and
those terms which will be set out in the Scheme Document and such
further terms as may be required to comply with the provisions of
the AIM Rules for Companies and the provisions of the Code.
8
Mariana Shares will be acquired by Sandstorm fully paid and free
from all liens, equitable interests, charges, encumbrances and
other third party rights of any nature whatsoever and together with
all rights attaching to them, including the right to receive and
retain all dividends and distributions (if any) declared, made or
payable after the date of this Announcement. If after the
date of this Announcement and prior to the Effective Date, any
dividend and/or other distribution and/or other return of value is
declared, made or paid or becomes payable in respect of Mariana
Shares, Sandstorm reserves the right (without prejudice to any
right Sandstorm may have with the consent of the Panel, to invoke
Condition 7(c) in Part A of this Appendix 1 to this Announcement)
to reduce the amount of Consideration payable for such Mariana
Shares under the terms of the Combination by an amount equivalent
to such dividend, other distribution or return of value.
9 The
Scheme will be governed by the laws of the Island of Guernsey and
be subject to the jurisdiction of the Courts of Guernsey and to the
conditions and further terms set out in this Announcement and in
the Scheme Document. The Combination will be subject to the
applicable requirements of the London Stock Exchange, the PRA, the
Guernsey Financial Services Commission, FSMA, the Code, the TSXV,
the TSX, applicable Canadian securities law and US federal
securities law (except to the extent that exemptive relief has been
granted by the SEC).
10 Any
persons who are subject to the laws of any jurisdiction other than
the United Kingdom should inform themselves about and observe any
applicable requirements. Further information in relation to
overseas shareholders will be contained in the Scheme Document.
11
Under Rule 13.5(a) of the Code, Sandstorm may not invoke a
Condition so as to cause the Combination not to proceed, to lapse
or to be withdrawn unless the circumstances which give rise to the
right to invoke the Condition are of material significance to
Sandstorm in the context of the Combination. The Conditions
contained in paragraph 1 above and, if applicable, any acceptance
condition if the Combination is implemented by means of an Offer,
are not subject to this provision of the Code.
12
Each of the Conditions shall be regarded as a separate Condition
and shall not be limited by reference to any other Condition.
Appendix 2 Bases and Sources
In this Announcement, unless otherwise stated,
or the context otherwise requires, the following base and sources
have been used:
1
Unless otherwise stated:
(a)
the financial information on Sandstorm has been extracted or
derived (without material adjustment) from Sandstorm's Annual
Report and Accounts for the year ended 31 December 2016 and the
unaudited interim production results for the three-month period
ending 31 March 2017;
(b)
the financial information on Mariana has been extracted or derived
(without material adjustment) from Mariana's Annual Report and
Accounts for the year ended 31 December 2016.
2 As at
the close of business on 25 April 2017 (being the last business day
prior to the date of this Announcement), Mariana had in issue
128,209,580 Mariana Shares. The ISIN Number for Mariana Shares is
GG00BD3GC324.
3 As at
the close of business on 25 April 2017 (being the last business day
prior to the date of this Announcement), Sandstorm had in issue
151,994,269 Sandstorm Shares. The ISIN Number for Sandstorm Shares
is CA80013R2063.
4 The
fully diluted share capital of Mariana as at 25 April 2017 (being
152,091,026 Mariana Shares) is calculated on the basis of:
(a)
the number of Mariana Shares referred to in paragraph 2 above,
which excludes 190,250 Mariana Shares held as treasury shares on 25
April 2017; and
(b)
any further Mariana Shares which may be issued on or after the date
of this Announcement:
(i) on the exercise
of options with an exercise price lower than 109.71 pence granted
under the Mariana Incentive Stock Option Plan, amounting to
7,717,500 Mariana Shares (which excludes the exercise of options
with an exercise price greater than 109.71 pence granted under the
Mariana Incentive Stock Option Plan, amounting to 180,000 Mariana
Shares) as at 25 April 2017; and
(ii)
on the exercise of Mariana Warrants, amounting to 15,263,946
Mariana Shares as at 25 April 2017; and
(iii) on the
vesting of share bonus awards under the Mariana Share Bonus Awards,
amounting to 900,000 Mariana Shares as at 25 April 2017.
5 The
issued share capital of the Combined Group (being 187,661,365) has
been calculated on the basis of:
(a) a
total number of 151,994,269 Sandstorm Shares in issue on 25 April
2017; and
(b) a
total number of 35,667,096 New Sandstorm Shares being required to
be issued to Mariana Shareholders (excluding Sandstorm) to satisfy
the New Sandstorm Share Consideration Amount payable under the
terms of the Combination, calculated on the basis of the entire
issued and to be issued share capital of Mariana referred to in
paragraph 4 of this Appendix 2 less any Mariana Shares held by
Sandstorm or in respect of which Sandstorm is interested by virtue
of its holding of Mariana Warrants.
6 The
value of the consideration to be paid by Sandstorm under the terms
of the Combination to Mariana Shareholders (excluding Sandstorm) is
£152.07 million (or US$195.27 million) has been calculated on the
basis of:
(a)
the fully diluted ordinary share capital of Mariana referred to in
paragraph 4 of this Appendix 2 less any Mariana Shares held by
Sandstorm or in respect of which Sandstorm is interested by virtue
of its holding of Mariana Warrants, representing a net total of
138,620,661 Mariana Shares to be purchased by Sandstorm;
(b)
total cash consideration (being £39.85 million or US$51.17 million)
calculated by reference to the consideration cash component of
28.75 pence per Mariana Share; and
(c)
total share consideration (being £112.22 million or US$144.10
million) calculated by reference to the consideration share
component of 0.2573 New Sandstorm Shares per Mariana Share, based
on the closing price of US$4.04 per Sandstorm Share on NYSE MKT and
a currency exchange rate of £0.7788 per US$, on 25 April 2017
(being the last Business Day before the date of this
Announcement).
7 As at
25 April 2017 (being the last Business Day before the date of this
Announcement) there are 7,717,500 options outstanding under the
Mariana Incentive Stock Option Plan with an exercise price lower
than 109.71 pence. If all of these options are exercised, the
aggregate cash consideration received from option holders upon
exercise will amount to £4.8 million.
8 As at
25 April 2017 (being the last Business Day before the date of this
Announcement) there are 1,454,251 2015 Warrants outstanding with an
exercise price of 30 pence. If all of these warrants are exercised,
the aggregate cash consideration paid by holders of 2015 Warrants
will amount to £0.4 million.
9 As at
25 April 2017 (being the last Business Day before the date of this
Announcement) there are 9,319,570 2016 Warrants outstanding that
are not held by Sandstorm, with an exercise price of 25 pence. If
all of these warrants are exercised, the aggregate cash
consideration paid by holders of 2016 Warrants (excluding
Sandstorm) will amount to £2.3 million.
10 The
market prices of the Mariana Shares are the closing middle market
quotations as derived from the Daily Official List.
11 The
market prices of the Sandstorm Shares, unless otherwise stated,
represent mid-market closing prices on the relevant date(s) on the
NYSE MKT as derived from Proquote.
12
VWAP figures are sourced from Bloomberg and, where relevant, are
translated from US$ to £ using the London close composite rate each
day prior to averaging.
13
Certain figures included in this Announcement have been subject to
rounding adjustments.
14
Unless otherwise stated, where amounts referred to in this
Announcement have been translated from US$ to £, an exchange rate
of 0.7788 has been used, as sourced from Bloomberg on 25 April
2017.
15
Under the heading "Strong production base" in section 3
("Background and reasons for the Combination"), and throughout this
Announcement, Sandstorm has included certain performance measures
in this Announcement that do not have any standardized meaning
prescribed by IFRS including average cash cost per ounce of gold
and cash operating margin. Average cash cost per ounce of gold is
calculated by dividing the total cost of sales, less depletion, by
the ounces sold. In the precious metals mining industry, Sandstorm
believes that this is a common performance measure but does not
have any standardized meaning. Sandstorm believes that, in addition
to conventional measures prepared in accordance with IFRS, certain
investors use this information to evaluate Sandstorm's performance
and ability to generate cash flow. Cash operating margin is
calculated by subtracting the average cash cost per ounce of gold
from the average realized selling price per ounce of gold.
Sandstorm presents cash operating margin as it believes that
certain investors use this information to evaluate Sandstorm's
performance in comparison to other companies in the precious metals
mining industry who present results on a similar basis. Sandstorm's
royalty income is converted to an attributable gold equivalent
ounce basis by dividing the royalty income for that period by the
average realized gold price per ounce from Sandstorm's gold streams
for the same respective period. These attributable gold equivalent
ounces when combined with the gold ounces sold from Sandstorm gold
streams equal total attributable gold equivalent ounces sold. The
presentation of these non-IFRS measures is intended to provide
additional information and should not be considered in isolation or
as a substitute for measures of performance prepared in accordance
with IFRS. Other companies may calculate these non-IFRS measures
differently. Please refer to Sandstorm management's discussion and
analysis for the year ended 31 December 2016, available at
www.sedar.com, for a reconciliation of non-IFRS measures.
16
Information regarding the Hot Maden Project has been derived from
the Hot Maden PEA. The Hot Maden PEA is preliminary in nature as it
includes inferred mineral resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves. Mineral resources that are not mineral reserves do
not have demonstrated economic viability, and as such there is no
certainty that the preliminary assessment and economics will be
realized. Mr. Roth, a qualified person under NI 43-101, has
reviewed the Hot Maden PEA on behalf of Sandstorm. To the best of
Sandstorm's knowledge, information and belief, there is no new
material scientific or technical information that would make
disclosure of the mineral resource or Hot Maden PEA inaccurate or
misleading.
17
Under the headings "Introduction" and "Geology and Mineral
Resources" in Section 8 ("Information relating to Mariana"), gold
equivalence (AuEq) was calculated using a 100 day moving
average of US$1,215/ounce for gold and US$2.13/pound for copper as
of 29 May 2016. No adjustment has been made for metallurgical
recovery or net smelter return as these remain uncertain at this
time. Based on grades and contained metal for gold and copper, it
is assumed that both commodities have reasonable potential to be
economically extractable. The formula used for Au equivalent grade
is: AuEq g/t = Au + [(Cu% x 22.0462 x 2.13)/(1215/31.1035)] and is
not adjusted for assumed metallurgical recovery. Au equivalent
ounces are calculated by multiplying Mineral Resource tonnage by Au
equivalent grade and converting for ounces. The formula used for Au
equivalent ounces is: AuEq Oz = [Tonnage x AuEq grade
(g/t)]/31.1035.
Appendix 3 Details of Irrevocable
Undertakings
The following holders of Mariana Shares have
given irrevocable undertakings to vote in favour of the Scheme at
the Guernsey Court Meeting and the resolutions to be proposed at
the General Meeting which are necessary to implement the
Combination and any related transactions (and to vote against any
resolutions which may result in the Combination not being
implemented) in relation to the following Mariana Shares,
respectively:
Directors
|
Name |
Number of Mariana Shares |
Percentage of issued share capital of Mariana |
|
|
|
|
| John
Goodwin |
62,000 |
0.05 |
|
|
|
|
| John
Horsburgh |
843,050 |
0.66 |
|
Glen Parsons |
337,250 |
0.26 |
| Eric
Roth |
649,371 |
0.51 |
|
|
|
|
|
|
|
|
The undertakings referred to above will remain
binding if a higher competing offer for Mariana is made. The
undertakings will cease to be binding if: (i) the Announcement is
not made by 5.00 p.m. (London time) on 26 April 2017 (or such later
date as the Company and the Offeror may agree); or (ii) the Panel
consents to Sandstorm not proceeding with the Combination; or (iii)
the Scheme does not become Effective by 31 August 2017 (other than
in circumstances where Sandstorm has elected to proceed by way of
takeover offer and such offer has not lapsed or been
withdrawn).
Other shareholders
|
Name |
Number of Mariana Shares |
Percentage of issued share capital of Mariana |
|
|
|
|
|
AngloGold Ashanti Holdings PLC |
4,898,295 |
3.82 |
|
|
|
|
|
Australian Investors Pty Ltd |
3,819,794 |
2.98 |
|
|
|
|
|
|
|
|
The undertakings referred to above will remain
binding if a higher competing offer for Mariana is made. The
undertakings will cease to be binding if: (i) the Announcement is
not released by 5.00 p.m. (London time) on 27 April 2017; or (ii)
the Panel consents to Sandstorm not proceeding with the
Combination; or (iii) the Scheme does not become Effective by 31
August 2017 (other than in circumstances where Sandstorm has
elected to proceed by way of takeover offer and such offer has not
lapsed or been withdrawn); or (iv) an offer is announced by a third
party on terms which represent in the reasonable opinion of KPMG
LLP (in the case of Australian Investors Pty Ltd) or RFC Ambrian
Limited (in the case of AngloGold Ashanti Holdings PLC) an
improvement of ten per cent or more on the value of the
consideration offered under the Combination.
Appendix 4Sandstorm Forecast
The following information on Sandstorm's
operating cash flow after tax (and before corporate overhead),
which is included in the Sandstorm Investor Presentation is
considered to be a profit forecast for the purposes of Rule 28 of
the Takeover Code. The Panel has agreed that the Sandstorm Forecast
should be treated as an ordinary course profit forecast, pursuant
to Note 2(a) on Rule 28.1.
|
Calendar Year |
Operating Cash Flow After-Tax (US$ millions) |
|
2017 |
US$50 |
|
2018 |
US$47 |
|
2019 |
US$58 |
|
2020 |
US$65 |
|
2021 |
US$65 |
Basis of preparation and assumptions
The Sandstorm Forecast is a repetition of
forecast for the periods set out above and included in the
Sandstorm Investor Presentation. The Sandstorm Investor
Presentation, and hence the Sandstorm Forecast, was prepared as at
or around 1 April 2017 with production figures estimated at or
around 1 January 2017.
It reflects the Sandstorm estimates of expected
future cash flows and cash costs associated with Sandstorm's
commodity streams and royalties. Expected future cash flows reflect
the estimated future production for each mine at which Sandstorm
has a commodity stream or royalty based on public disclosure,
technical reports and incorporating management estimates where
appropriate.
Expected future cash flows reflect metal price
assumptions of US$1,200 per ounce of gold, US$17.00 per ounce of
silver and US$2.50 per pound of copper. It is also assumed
that tax rates will remain materially unchanged from prevailing
rates.
Estimated future cash costs are at a fixed price
per commodity unit or at variable price based on spot which is
consistent with the underlying terms of the commodity stream or
royalty.
The Sandstorm Forecast does not include any
general and administrative costs associated with Sandstorm which
would otherwise be included in operating cash flows under
IFRS.
Directors' confirmation
The cash flow amounts presented above do not
have any standardised meaning prescribed by IFRS. The Sandstorm
Directors have considered the Sandstorm Forecast and confirm that
it remains valid as at the date of this Announcement, that it has
been properly compiled on the basis of the assumptions set out
above, and that the basis of the assessment is consistent with
Sandstorm's prior forecasts.
Appendix 5 Definitions
The following definitions apply throughout this
Announcement unless the context requires otherwise.
| £,
Sterling, pence or p |
the
lawful currency of the UK |
| 2015
Warrants |
the
warrants issued under the 2015 Warrant Instrument |
| 2015
Warrant Instrument |
the
Mariana share warrant instrument dated 21 October 2015 |
| 2016
Warrants |
the
warrants issued under the 2016 Warrant Instrument |
| 2016
Warrant Instrument |
the
Mariana share warrant instrument dated 4 May 2016 |
|
AIM |
AIM, a
market of the London Stock Exchange |
|
Announcement |
this
announcement made pursuant to Rule 2.7 of the Code |
|
Articles |
the
articles of incorporation of Mariana, as amended from time to
time |
|
Awalé |
Awalé
Resources SARL |
|
Business Day |
a day
(other than a Saturday, Sunday, public or bank holiday) on which
banks are generally open for business in London and Guernsey |
|
Canadian Holders |
holders
of Mariana Shares in Canada, resident in Canada or with a
registered address in Canada, and any custodian, nominee or trustee
holding Mariana Shares for persons in Canada or with a registered
address in Canada |
| Cash
Consideration Amount |
28.75
pence payable per Scheme Share under the terms of the Scheme |
|
Code |
the City
Code on Takeovers and Mergers |
|
Combination |
the
proposed acquisition by Sandstorm of the entire issued and to be
issued ordinary share capital of Mariana |
|
Combined Group |
the
Sandstorm Group, as enlarged by the Combination |
|
Companies Act |
the
Companies Act 2006, as amended from time to time |
|
Companies (Guernsey) Law |
the
Companies (Guernsey) Law, 2008, as amended from time to time |
|
Conditions |
the
conditions to the implementation of the Combination (including the
Scheme) as set out in Appendix 1 to this Announcement and to be set
out in the Scheme Document |
|
Confidentiality Agreement |
the
agreement between Sandstorm and Mariana in respect of confidential
information relating to the proposed Combination dated 28 March
2017 |
|
Consideration |
the
basic consideration payable to Mariana Shareholders in connection
with the Combination comprising a share component of 0.2573 New
Sandstorm Shares per Mariana Share and a cash component of 28.75
pence per Mariana Share |
|
Co-operation Agreement |
the
agreement between Sandstorm and Mariana in respect of the conduct
of the Combination dated on or around the date of this
Announcement |
|
Dealing Disclosure |
an
announcement pursuant to Rule 8 of the Code containing details of
dealings in interests in relevant securities of a party to an
offer |
|
Disclosed |
information disclosed by, or on behalf of, Mariana in: (a)
Mariana's annual report and accounts for the year ended 31 December
2016; (b) this Announcement; or (c) as otherwise
publicly announced by Mariana no later than one (1) Business Day
prior to the date of this Announcement (by the delivery of an
announcement to Regulatory Information Service) |
|
Effective |
(i) if
the Combination is implemented by way of the Scheme, the date on
which the order of the Guernsey Court sanctioning the Scheme under
Part VIII of the Companies (Guernsey) Law becomes effective in
accordance with its terms; or (ii) if the Combination is
implemented by way of an Offer, such Offer having been declared or
become unconditional in all respects in accordance with the
Code |
|
Effective Date |
the date
upon which the Scheme becomes Effective |
|
Excluded Shares |
(i) any
Mariana Shares beneficially owned by Sandstorm or any other member
of the Sandstorm Group; (ii) any Mariana Shares held as treasury
shares by Mariana; and (iii) any other Mariana Shares which
Sandstorm and Mariana agree will not be subject to the Scheme |
|
Exploration Properties |
the
remaining exploration properties of Mariana with a focus on gold,
silver and associated metals in Ivory Coast, Turkey and
Argentina |
|
FCA |
the
Financial Conduct Authority |
|
FSMA |
Financial Services and Markets Act 2000, as amended from time to
time |
| Forms
of Proxy |
the
forms of proxy in connection with each of the Guernsey Court
Meeting and the General Meeting, which shall accompany the Scheme
Document |
|
General Meeting |
the
general meeting of Mariana to be convened in connection with the
Scheme and in accordance with the Articles, notice of which will be
set out in the Scheme Document, including any adjournment
thereof |
|
g/t |
grammes
per tonne |
|
Guernsey Court |
the
Royal Court of Guernsey |
|
Guernsey Court Meeting |
the
meeting of the Scheme Shareholders (other than the holders of the
Excluded Shares) convened by order of the Guernsey Court pursuant
to section 107 of the Companies (Guernsey) Law and in compliance
with Section 3(a)(10) of the US Securities Act, to consider and, if
thought fit, to approve the Scheme, after a hearing upon the
procedural and substantive fairness of the terms and conditions of
the Scheme at which Mariana Shareholders have the right to appear,
with or without modification (including any adjournment or
postponement thereof) |
| Hot
Maden |
a
high-grade, gold-copper, development-stage project in northeast
Turkey, in which Mariana holds a 30% incorporated JV interest via
the Turkish company Artmin Madencili Sanayive Tikaret AS |
| Hot
Maden PEA |
the
technical report entitled "Amended National Instrument 43-101
Technical Report Preliminary Economic Assessment Hot Maden Gold
Copper Project Artvin Province, Turkey" with an effective date of 1
March 2017 |
|
IFRS |
the
International Financial Reporting Standards as issued by the
International Accounting Standards Board |
|
ISIN |
International Securities Identification Number |
|
IRR |
internal
rate of return |
|
JV |
joint
venture |
|
km2 |
square
kilometres |
|
KPMG |
KPMG
LLP, a limited liability partnership registered in England and
Wales with registered number OC301540 and which has its registered
office at 15 Canada Square, E14 5GL, United Kingdom |
|
Koz |
thousand
ounces |
|
kt |
thousand
tonnes |
|
Lidya |
Lidya
Madencilik Sanayive Ticaret A.S., incorporated and registered in
Turkey with company number 590086 and registered address Büdere
Caddesi No: 163 34394, Zincirlikuyu, Istanbul |
|
London Stock Exchange |
London
Stock Exchange plc |
| Long
Stop Date |
31
August 2017 |
|
Mariana |
Mariana
Resources Limited, a non-cellular company incorporated under the
laws of Guernsey with registered number 44276 and registered
address at Granite House, La Grande Rue, St Martin, Guernsey, GYI
3RS |
|
Mariana Employee Equity Plans |
the
Mariana Incentive Stock Option Plan and the Mariana Share Bonus
Awards |
|
Mariana Group |
Mariana
and its subsidiary undertakings |
|
Mariana Incentive Stock Option Plan |
the
incentive stock option plan approved by Mariana Shareholders on 22
June 2011 |
|
Mariana Independent Directors |
the
directors of Mariana that are independent for the purposes of the
Scheme, being John Horsburgh and John Goodwin |
|
Mariana Options |
options
to subscribe for Mariana Shares granted under the Mariana Employee
Equity Plans |
|
Mariana Share Bonus Awards |
the
share bonus awards made by Mariana to each of (i) Glen Parsons
pursuant to a letter agreement entered into between Mariana and
Glen Parsons on 10 March 2017; and (ii) Eric Roth pursuant to a
letter agreement entered into between Mariana and Eric Roth on 10
March 2017, in each case as announced by Mariana on 1 February 2017
(and, for the avoidance of doubt, excluding the options to
subscribe for Mariana Shares referred to in those agreements) |
|
Mariana Shareholders |
the
registered holders of the Mariana Shares |
|
Mariana Shares |
ordinary
shares of 0.1 pence each in the capital of Mariana |
|
Mariana Warrant Holders |
the
holders of the Mariana Warrants |
|
Mariana Warrant Instruments |
the 2015
Warrant Instrument and the 2016 Warrant Instrument |
|
Mariana Warrants |
the 2015
Warrants and the 2016 Warrants |
|
Moz |
million
ounces |
|
Mt |
million
tonnes |
|
Mtpa |
million
tonnes per annum |
| New
Sandstorm Share Consideration Amount |
0.2573
Sandstorm Shares payable per Scheme Share under the terms of the
Scheme |
| New
Sandstorm Shares |
the
Sandstorm Shares which are to be issued pursuant to the Scheme |
| NI
43-101 |
Canadian
National Instrument 43-101 Standards of Disclosure for Mineral
Projects |
|
NPV |
net
present value |
|
NSR |
net
smelter royalty |
| NYSE
MKT |
the NYSE
MKT LLC |
|
Offer |
if
(subject to the consent of the Panel) Sandstorm elects to effect
the Combination by way of a takeover offer, the offer to be made by
or on behalf of Sandstorm to acquire the entire issued and to be
issued ordinary share capital of Mariana (other than those shares
already held by Sandstorm) on the terms and subject to the
conditions to be set out in the related offer document |
|
Panel |
the
Panel on Takeovers and Mergers |
|
PFS |
Preliminary Feasibility Study |
|
PRA |
the
Prudential Regulation Authority |
|
Regulatory Information Service |
any
information service authorised from time to time by the FCA for the
purpose of disseminating regulatory announcements |
|
Restricted Jurisdiction |
any
jurisdiction where local laws or regulations may result in
significant risk of civil, regulatory or criminal exposure if
information concerning the Combination is sent or made available to
Mariana Shareholders in that jurisdiction (in accordance with Rule
30.3 of the Code) |
|
Retention Arrangements |
the
proposed retention arrangements with Glen Parsons and Eric Roth as
described in paragraph 10 (Directors, management and employees) of
this Announcement |
| RFC
Ambrian |
RFC
Ambrian Limited |
|
RPM |
RungePincockMinarco Limited |
|
Scheme |
the
scheme of arrangement under Part VIII of the Companies (Guernsey)
Law to be proposed by Mariana to Mariana Shareholders in connection
with the Combination, with or subject to any modification, addition
or condition approved or imposed by the Guernsey Court and agreed
by Sandstorm and Mariana |
|
Scheme Court Hearing |
the
second hearing before the Guernsey Court on an application to
sanction the Scheme |
|
Scheme Document |
the
document to be despatched to Mariana Shareholders and others
containing, among other things, the Scheme, an explanatory
statement in compliance with Part VIII of the Companies (Guernsey)
Law and the notices of the Guernsey Court Meeting and the General
Meeting |
|
Scheme Record Time |
means
the time and date specified in the Scheme Document by reference to
which the entitlements of Mariana Shareholders under the Scheme
will be determined, expected to be 6.00 pm on the Business Day
before the Scheme becomes Effective |
|
Scheme Shareholders |
holders
of Scheme Shares |
|
Scheme Shares |
Mariana
Shares: (a) in issue as at the date of the Scheme Document;
(b) (if any) issued after the date of the Scheme Document and
before the Guernsey Court Meeting; and (c) (if any) issued on
or after the Guernsey Court Meeting but before the Scheme Record
Time, in respect of which the original or any subsequent holder
thereof is, or shall have agreed in writing to be, bound by the
Scheme, but in each case other than the Excluded Shares |
|
Scheme Voting Record Time |
6.00
p.m. on the day which is two days before the date of the Guernsey
Court Meeting or, if the Guernsey Court Meeting is adjourned, 6.00
p.m. on the day which is two days before the day of such adjourned
meeting |
|
SEC |
US
Securities and Exchange Commission |
|
Sandstorm |
Sandstorm Gold Ltd, a company incorporated under the laws of the
Province of British Columbia, Canada with registered address
1400-400 Burrard Street, Vancouver, British Columbia, Canada V6C
3A6 |
|
Sandstorm Forecast |
the
information on Sandstorm's operating cash flow after tax (and
before corporate overhead) which is included in the Sandstorm
Investor Presentation which is available on Sandstorm's
website |
|
Sandstorm Group |
Sandstorm and its subsidiary undertakings |
|
Sandstorm Investor Presentation |
Sandstorm's latest investor presentation, which is available on
Sandstorm's website |
|
Sandstorm Shares |
Sandstorm common shares |
|
SpinCo |
a
separate company into which Sandstorm intends to spin-out the
Exploration Properties following completion of the Combination |
|
Stream and Royalty Portfolio |
Sandstorm's diversified portfolio of 155 streams and royalties
including 20 producing, 23 development-stage, 26 advanced
exploration-stage and 86 exploration-stage assets |
|
Substantial Interest |
a direct
or indirect interest in 20 per cent. or more of the voting equity
capital of an undertaking |
|
t |
tonnes |
| Teck
Royalty Package |
the
royalty portfolio consisting of 52 royalties acquired by Sandstorm
from Teck Resources Limited and its affiliates in the year ended 31
December 2016 |
|
TSX |
the
Toronto Stock Exchange |
|
TSXV |
the TSX
Venture Exchange |
|
UK or United Kingdom |
the
United Kingdom of Great Britain and Northern Ireland |
|
United States of America, United States or US |
the
United States of America, its territories and possessions, any
state of the United States and the District of Columbia |
| US
Exchange Act |
the
United States Securities Exchange Act of 1934 and the rules and
regulations promulgated thereunder (as amended) |
| US
GAAP |
United
States generally accepted accounting principles |
| US
Holders |
holders
of Mariana Shares in the US, resident in the US or with a
registered address in the US, and any custodian, nominee or trustee
holding Mariana Shares for persons in the US or with a registered
address in the US |
| US
Optionholders |
holders
of Mariana Options in the US, resident in the US or with a
registered address in the US, and any custodian, nominee or trustee
holding Mariana Options for persons in the US or with a
registered address in the US |
| US
Securities Act |
the
United States Securities Act of 1933 and the rules and regulations
promulgated thereunder (as amended) |
| US
Warrantholders |
holders
of Mariana Warrants in the US, resident in the US or with a
registered address in the US, and any custodian, nominee or trustee
holding Mariana Warrants for persons in the US or with a registered
address in the US |
|
US$ |
the
lawful currency of the United States |
|
VWAP |
volume
weighted average price |
| Wider
Mariana Group |
Mariana
and the subsidiaries and subsidiary undertakings of Mariana and
associated undertakings (including any joint venture, partnership,
firm or company in which any member of the Mariana Group is
interested or any undertaking in which Mariana and such
undertakings (aggregating their interests) have a Substantial
Interest) |
| Wider
Sandstorm Group |
Sandstorm and the subsidiaries and subsidiary undertakings of
Sandstorm and associated undertakings (including any joint venture,
partnership, firm or company in which any member of the Sandstorm
Group is interested or any undertaking in which Sandstorm and such
undertakings (aggregating their interests) have a Substantial
Interest) |
|
Yamana |
Yamana
Gold Inc. |
For the purposes of this Announcement,
subsidiary, subsidiary undertaking,
undertaking, associated undertaking have the meanings
given by the Companies Act.
References to an enactment include references to
that enactment as amended, replaced, consolidated or re-enacted by
or under any other enactment before or after the date of this
Announcement. All references to time in this Announcement are to
London time unless otherwise stated.
Attachments:
http://www.globenewswire.com/NewsRoom/AttachmentNg/8fd81233-bfb2-47b8-bf63-0b9d8b440584
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